How to achieve your desired retirement lifestyle if you’re single

From Diane Keaton and Drew Barrymore to Zac Efron and Lenny Kravitz, there’s no shortage of celebrities who are happy and proud to champion the single life.

However, while it may suit you to be footloose and fancy-free, unless you can match the bank balance of an A-list star, you might need to approach your retirement planning with particular care and consideration.

According to research by Standard Life, a single person needs £277,500 more in their pension pot to achieve a “moderate” standard of living in retirement than pensioner couples.

While these are average figures, and not specific to your particular circumstances, they highlight the importance of careful financial planning to ensure you save enough for your desired lifestyle in retirement.

Single people face unique challenges when planning for their financial future

Living alone can be expensive.

Indeed, a single person’s costs will not automatically be half the amount couples pay. Apart from a 25% single-occupancy discount on your Council Tax bill, if you’re single, you’ll need to cover the full costs of living on your own, including:

• Mortgage or rent
• Utility bills
• Broadband.

Research published by the Guardian has revealed that single people spend an average of £860 more each month than those in a couple.

Additionally, single people miss out on certain joint financial planning benefits, such as sharing annual allowances. For example, a couple could combine their annual ISA allowances and save up to £40,000 tax-efficiently (2024/25).

A survey published by Irwin Mitchell also suggests that single people are less likely to have planned for retirement than couples, despite potentially needing to be more diligent in doing so.

The findings revealed that 40% of adults aged 40 and over who had never been married, had no retirement plans in place, compared to 23% of married people of the same age.

Fortunately, if you’re single, there are steps you can take to help you build a financial future that supports your unique situation and retirement goals. So, here are four practical steps that could help when planning for retirement if you’re single.

1. Calculate how much you need to save to afford your desired retirement lifestyle

The first step towards effective retirement planning is to set clear financial goals.

For a “comfortable” retirement, FTAdviser reports that a single person would need to save around £675,000 compared to £418,000 for someone living with their partner.

Of course, these are average figures. Your circumstances and retirement goals will be unique to you.

So, to understand how much you’re likely to need for your desired retirement lifestyle, you might want to consider:

• When you plan to retire
• How you want to spend your retirement
• Your life expectancy.

Calculating your expected costs and income far into the future can be complicated. Especially when you factor in the potential for changes that could affect your financial plan, such as rising or falling inflation rates.

A financial planner can help by using cashflow modelling to project your future income needs and determine whether you’re on track to meet your financial goals. If it appears there might be a shortfall, your financial planner can create a plan to help you progress towards your unique goals.

2. Maximise your pension contributions

Saving into a workplace pension can be one of the most tax-efficient ways to bolster your retirement fund.

This is because the government offers generous tax relief on any contributions you make, up to your Annual Allowance. For 2024/25, this is £60,000 or 100% of your earnings, whichever is lower.

Your Annual Allowance may be lower if your income exceeds certain thresholds, or you have already flexibly accessed your pension.

The level of tax relief you’ll receive depends on which Income Tax band you fall into. A basic-rate taxpayer will have their contributions topped up by 20%, so a £1,000 contribution only “costs” £800.

If you’re a higher- or additional-rate taxpayer, you could claim even more tax relief – 40% or 45% respectively – through your self-assessment tax return.

To maximise your pension contributions, you might want to consider:

• Starting to pay into a pension as early as possible
• Increasing your pension contributions beyond the default amount
• Opting to use salary sacrifice, if your employer offers the benefit
• Continuing to pay contributions during career breaks, if possible.

3. Make the most of available tax allowances

If you’re single, making the most of available tax allowances could help you retain more of your wealth and achieve your long-term financial goals.

You could save and invest more tax-efficiently by taking advantage of the following annual allowances:

• Dividend Allowance – You could take up to £500 in dividends (2024/25).
• ISA allowance – By using your full annual allowance you could save and invest up to £20,000 (2024/25) tax-efficiently.
• Capital Gains Tax (CGT) Annual Exempt Amount – This allows you to crystalise gains up to £3,000 (2024/25) without paying any CGT.

You may benefit from speaking to a financial planner who can ensure you’re making the most of any tax allowances you’re entitled to.

4. Consider taking out appropriate financial protection

If you live with a partner and you each contribute to household finances, there’s a good chance you’ll have some financial support if you become ill and unable to work.

Unfortunately, if you’re single and rely solely on your income to cover day-to-day costs, this may not be the case.

That’s why protection is crucial for single people.

The right protection could provide a safety net that allows you to cover essential costs – such as your mortgage and utility bills – if you have a gap in your income. What’s more, putting adequate cover in place could provide invaluable peace of mind and allow you to continue contributing to your retirement savings.

Get in touch

If you have further questions about planning financially as a single person to fund your desired retirement lifestyle, we can help.

Please get in touch either by email at helpme@aspirellp.co.uk or by calling 0117 9303510.

Please note

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

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

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.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pension Regulator.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.