Why your single clients need to plan differently for their retirement

young businesswoman

You’ll recently have read of the sad passing of inspirational rugby league legend Rob Burrow at the age of just 41.

The former Leeds Rhinos star died four years after he was diagnosed with Motor Neurone Disease (MND). He spent the last years of his life alongside his friend Kevin Sinfield, raising more than £15 million for MND charities.

Rob left behind his wife Lindsey, who he married in 2006, and their three children Jackson, Maya and Macy.

Whatever type of client you work with, there will be occasions when – either by choice or through circumstance – they may find themselves suddenly single. Often this will be for a challenging or unexpected reason.

Consequently, single people have specific needs regarding their finances and, in particular, their retirement. Indeed, Standard Life recently reported that single pensioners need a staggering £277,000 more in their pension pot to secure a “moderate” standard of living in retirement than pensioner couples.

Read on to discover why your single clients may need specific advice when it comes to preparing for their retirement.

Single clients will likely need to save more to generate the same standard of living as a couple

Living alone can be expensive. Aside from a 25% single occupancy Council Tax discount, your single clients will have to cover the full cost of expenditure including their rent or mortgage, utilities, and so on.

Research from Standard Life has revealed that single retirees who want to achieve the Pension and Lifetime Savings Association (PLSA) “moderate” living standard (defined as including a car and one two-week foreign holiday a year) would need an annual income after tax of £31,300.

Assuming they receive the full State Pension (£11,502.40 a year) they would need income of £24,480.10 each tax year to maintain this standard of living.

To buy an inflation-linked annuity – a guaranteed income for life – they would need to have amassed around £555,000 in retirement savings at current rates.

Compare this to a couple in retirement who would need an annual income of £43,100 to reach the same standard of living. As they would receive two State Pensions, they would need to save £277,500 each – half the amount of a single pensioner.

Dean Butler from Standard Life said: “Couples can pool their finances for retirement, and as our analysis shows, single pensioners need to amass a significantly bigger pension pot to achieve the same standard of living as pensioner couples.”

Single clients should make the most of pensions and tax-efficient savings

Considering that they are likely to have to save significantly more than individuals in a couple, your single clients may need very specific advice.

An important first step is for them to understand how much income they may need in retirement and, hence, how much they may need to accumulate in their fund.

Thinking about the lifestyle they want in retirement, and the cost of this, can help us to create cashflow models that forecast a client’s future needs. We can take income, assets, and expenditure into account to work out:

  • How much a client might need to retire on their terms
  • What provision they have made already
  • What steps they need to take if there is a gap between their goals and the current reality.

Pensions are one of the most tax-efficient ways a client can save for their retirement. They will usually receive tax relief on their contributions at their marginal rate of tax, only limited by the Annual Allowance (£60,000 in 2024/25) or their own earnings.

As pension funds are invested, making contributions early can also have a beneficial effect thanks to the power of compounding.

In addition, making the most of their ISA subscription limit can help a client boost their tax-efficient savings. Interest and returns from ISAs are paid free of Income, Dividend, and Capital Gains Tax, making them an excellent way to build up a nest egg for the future.

Single clients may also need protection to ensure they can continue saving for retirement

If you have a single client who is suddenly unable to work – perhaps because of an accident or ill health – they don’t have the safety net of a second household income.

Consequently, single people need to ensure they have the right protection in place. This might be through their employer (if they have a generous sick pay policy) or through their own provision.

The right protection can also support a client’s retirement objectives.

Imagine you have a client who can’t work for several months because they have been in an accident, or they are seriously ill. If their income reduces during this time, they may have to make economies and that might include pausing or reducing their regular savings or pension contributions.

This can have a knock-on effect in the future if their pot is no longer big enough to generate the income they need.

The right protection not only provides a safety net for the here and now, but can also help a client maintain their regular contributions and meet their longer-term objectives.

Get in touch

If you have clients who find themselves single by choice or circumstance, we can help them build a bespoke financial plan that can support them into their future.

To find out more, or if you’d like to explore how you could work more closely with Sovereign, please email or call 01454 416653.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

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