Attitudes are changing towards relationships and according to the BBC, 59% of single people surveyed said they were “content with their relationship status”. The reasons for this vary, with some people believing that they have more freedom to pursue their own goals while single, others may simply prefer living on their own instead of sharing their space, and many hope to enter a relationship if the right opportunity presents itself.

Single People Spend An Average Of £860 A Month More Than Those In A Couple

There are several unique challenges single people may face when managing their wealth.

One of the main financial challenges that single people face is that their living costs are likely to be much higher than couples.

Indeed, as reported by the Guardian, single people spend an average of £860 a month more than couples. This is likely because they have to take on a range of different costs alone, while couples can split them.

Often, expenses are not halved because the person lives alone, making the financial burden much greater. These include:

• Mortgage or rent costs
• Council Tax – while you can get a discount if you live alone, it is only 25%
• Utility bills
• Internet and TV subscriptions

Consequently, as FTAdviser reports, a single person would need to save, on average, £160,000 more than people living as part of a couple to achieve the same lifestyle when they retire, making it more difficult to build your retirement savings.

Saving For Retirement Can Be More Challenging

Typically, couples may have a higher household income than single people if they both work. Plus, their individual outgoings may be lower as they can split certain costs.

As a result, couples may have far more expendable income than single people, meaning they can contribute more to their pensions, savings, and investments.

Additionally, couples enjoy certain joint financial planning benefits that single people do not. For instance, they may be able to contribute to one another’s pensions to ensure that they benefit from both Annual Allowances and potentially maximise tax relief.

Couples can also use two ISA allowances and Personal Savings Allowances, allowing them the potential to double the amount that they can save or invest tax-efficiently.

If they are married or in a civil partnership, they may also receive certain financial benefits they can utilise as a couple including:

• The Marriage Allowance
• Inheritance Tax (IHT) exemptions
• Capital Gains Tax (CGT) exemptions.

Taking advantage of these joint planning benefits, and making decisions about retirement as a couple, could make it easier to build retirement savings.

Single People May Be Less Likely To Seek Financial Support

According to Irwin Mitchell, 29% of married couples had taken some advice about their retirement, compared with only 20% of single people.

As a result, only 17% of single people knew how much they needed to save for retirement and how to achieve this, compared to 32% of married people.

Ultimately, this means that many single people are less able to contribute to retirement savings and may lack the financial knowledge to plan for later life. Fortunately, with the right support, you may find it easier to meet your savings goals and achieve your desired lifestyle in retirement.

It Could Be More Difficult To Pass Wealth To Your Loved Ones

If you are married or in a civil partnership, you can normally pass on your entire estate to your spouse without an IHT charge. Your spouse can also inherit your unused “nil-rate band”– the amount that you can pass on without IHT – of £325,000 in the 2023/2024 tax year.

They may also inherit your “residence nil-rate band” of £175,000, which applies when passing on your main home to a direct descendant.

By adding your unused nil-rate bands to their own, your surviving spouse could potentially pass on up to £1 million without IHT.

Conversely, single people or unmarried couples only benefit from their own nil-rate bands, meaning they can pass on half as much before triggering an IHT charge.

As such, it may be more difficult to pass wealth on to your loved ones if you are single, and you may need to consider this when creating an estate plan.

Working With A Professional Could Help You Improve Your Financial Plan

If you are single and you are concerned about your retirement, working with a financial planner may benefit you in several ways.

Firstly, they can discuss your goals and desired lifestyle in retirement and help you determine how much you need to save to achieve this. They can also use cashflow planning to help you assess your outgoings and account for the increased costs you may face as a single person.

Once you have a clear goal in mind, your financial planner can offer guidance about your pension contributions to ensure that you are on track to meet your savings goals. They can also help you find ways to save and invest tax-efficiently.

It may also be useful to discuss your estate plan with a professional as they can help you explore different ways to pass on your wealth including lifetime gifts or trusts, for example.

Get in touch

Get in touch or email us at advice@milstedlangdon.co.uk for more information.