Consider these factors as you plan for retirement while living independently.

The observed trend manifests in the lives of the customers being assisted. Recently, conversations were held with various single individuals who express a desire to sustain their lifestyles throughout retirement. Attaining this objective seems plausible, especially when taking proactive measures to manage finances. The essential points intended for their awareness, as well as yours, have been consolidated.

1. Retirement tends to be more costly for individuals living alone.

When customers seek guidance on determining the required income for their retirement, the Retirement Living Standards figures are employed for assistance. These figures reveal that a single person typically spends around two-thirds of what a couple does. This discrepancy is primarily due to similar bills being incurred whether there’s one or two individuals in the household. Those without many close relatives nearby may also need to consider additional expenses, such as long-term care in later life.

2. Saving can pose a greater challenge for single individuals.

Given that the cost of running a household remains comparable, individuals living on their own may discover higher expenditures on everyday costs and bills compared to two-adult households that can divide their expenses. Single individuals may also encounter unexpected additional costs, such as hiring tradespeople—tasks that are often designed for two people—or adopting a more spontaneous and carefree lifestyle. Consequently, allocating funds to pensions and investments may become more challenging, even though it is potentially more essential. Hence…

3. Reassessing spending habits is worthwhile.

Gaining a clear understanding of monthly expenses and exploring opportunities to reduce household bills is essential. While preferences vary, making choices like forgoing certain luxuries, such as having the latest phone, in favour of saving more for retirement can be a wise decision. The pandemic has highlighted the joy found in life’s simpler aspects. This perspective is not one of sacrifice but rather a deliberate decision to allocate resources across one’s entire life.

Special consideration needs to be given to retirement planning for women. This is because women often have smaller pensions compared to men, influenced by various factors. Women may not prioritise pensions during divorce proceedings and might have less money to save due to the gender pay gap. Single women may prioritise their social life, and single parents are likely to prioritise their children.

4. Gain Insight into Your Current Financial Position

Determining the appropriate amount to save for retirement can be challenging. However, due to the limited margin for error, having a precise understanding of your pension and investment status is crucial. This includes details such as the number of pension pots, projected income, and the returns on your investments. Uncertainty is a luxury you cannot afford, and that’s why I find immense satisfaction in helping individuals achieve clarity. Recently, I assisted a woman in her early sixties who found herself suddenly single. Uncertain about her retirement prospects, a comprehensive review of her pensions and retirement goals allowed me to recommend adjustments that put her on the right track.

5. Establish Your Retirement Financial Needs

An integral part of grasping your financial standing is identifying the targeted income for your retirement. The Retirement Living Standards figures offer valuable guidance, presenting options based on the level of luxury or modesty you desire in your retirement. Once you are aware of your current retirement expectations and have a target income in mind, you can strategize on how to bridge any gaps. Options include saving more, delaying your retirement, or…

6. Optimise Your Financial Returns

Maximising the efficiency of your finances as a single person in retirement involves various strategies. For instance, leverage all available tax advantages, as these can accumulate to a significant amount over a lifetime. This may involve channelling more funds into a private pension or workplace pension rather than investments, capitalising on tax relief for your contributions. It’s important to verify that you’re receiving the appropriate amount of tax relief, particularly if you fall under a higher-rate tax category. It’s crucial to note that tax rules are subject to change and contingent on individual circumstances.

In some cases, even if your employer’s payroll department directly deducts your contribution, you might still need to reclaim additional relief through HMRC or your self-assessment tax return. Additionally, make use of your full tax-free ISA allowance for savings.

Consolidating multiple pension pots into one can minimise unnecessary charges. I typically seek the option with the lowest costs, most suitable investment choices, and optimal retirement options. While consulting with an adviser is advisable, it’s essential to be aware of potential risks associated with such decisions. In certain situations, seeking advice may be mandatory, and there may be associated costs.

This brings me to the final point: individuals, especially in their younger years, may favour a higher level of investment risk for a pension or investment. Conversely, those approaching retirement might prefer a lower level to mitigate the risk of significant changes in pension value. Reviewing the risk profile across your portfolio ensures alignment with your personal preferences, and seeking advice from an adviser can be beneficial.

Upon reaching the desired age, you can spend your time precisely as you wish, enjoying a rich retirement living experience. It’s important to recognize that the value of investments can fluctuate, and there is a possibility of receiving less than the amount invested. While single individuals may experience added financial pressure in retirement, the upside is complete control over plans.