Married or single? It makes a difference in retirement

A car or a condo costs the same whether there is one person buying or two. But financial planning is different for single and married people, especially in retirement. Here’s a look at the challenges and opportunities unique to couples, singles and the widowed.

When you’re married

In addition to companionship, retired couples can take advantage of a range of income-splitting strategies. Income-splitting involves transferring income from the spouse in a higher tax bracket to his or her lower-income spouse in order to reduce the overall tax bill and minimize the clawback of Old Age Security (OAS) benefits.

Up to half of Registered Retirement Income Fund (RRIF) withdrawals and other eligible pension income can be transferred to the lower-income spouse. A couple can also share their Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits.

Where there is a significant difference in a couple’s ages, it can also be beneficial to base RRIF withdrawals on the age of the younger spouse. This sets the minimum required payment at a lower amount, meaning more money can continue to grow, tax-deferred.

Having a spouse doesn’t always bring financial planning advantages – like when you disagree on big decisions. For example, Mr. Smith might want to sell the family home and downsize while Mrs. Smith has always imagined staying there for life, keeping a welcoming place for their children to visit.

Dilemmas like this, where a practical decision has psychological and emotional implications, can be difficult to solve. It calls for communication, understanding and compromise.

When you’re single

According to the latest census, more than four in 10 Canadians aged 65 and older are single(1). When you’re single, you may find it easier to make financial decisions about your retirement – you don’t need to compromise or take your partner’s feelings into consideration. But in many other respects, the financial life of a single retiree calls for more precise planning.

Planning for the possibility of failing health is one example. At some point, you may need assistance with daily activities in order to live comfortably and safely in your own home. To cover the associated cost, you may want to set funds aside or consider purchasing long-term care insurance.

Tax and estate planning is also different for a single individual. Since your Registered Retirement Savings Plan (RRSP) or RRIF assets can’t be rolled over tax-free to your spouse, you’ll need to plan for the eventual tax liability. Depending on your circumstances, more than half of your RRSP or RRIF assets could go to tax. It’s advisable to consult with a tax or estate planning professional to explore strategies on how best to manage the tax hit.

Widowhood brings change

Widows and widowers face financial issues quite different from those of individuals who have always been single. In many couples, it’s not unusual for one spouse to manage the family’s finances. If that person passes away first, the surviving spouse is likely to need assistance with investing any life insurance proceeds, managing investments and planning retirement income. If the estate’s assets included an investment portfolio, its holdings may need to be adjusted to suit a different risk tolerance.

If the deceased’s RRSP or RRIF assets were rolled over, the surviving spouse may face a tax challenge. While the assets aren’t taxed at transfer, mandated minimum withdrawals from a sizable RRIF may push the surviving spouse into a higher tax bracket and affect eligibility for income-tested government benefits like OAS.

A widow or widower also has new estate planning decisions to make – from assigning new beneficiaries to planning for future tax implications.

Whatever your situation – single, married, retired or looking forward to it – we can help you take the steps today that will help you feel confident about your future.


1 Statistics Canada, Census of Population, 2011.


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