Advisors, here’s how to help single retired clients

Christine Van Cauwenberghe tells WP about some of the tax implications faced by single retirees and tells advisors how they can help

Advisors, here’s how to help single retired clients

More Canadians are living alone in, or approaching, retirement than ever before. Some are outliving their deceased partners for longer periods, others are simply choosing to remain single, and ‘grey’ divorce is also on the rise as more people choose to separate later in life.

Last week, Christine Van Cauwenberghe, VP for Tax and Estate Planning at Investors Group, explained some of the challenges faced by single clients in the current market. Here, Van Cauwenberghe talks about some of the tax implications faced by single retirees and tells advisors how they can help.

Depending on personal circumstances, taxation in retirement can be a doubled edge sword. But, either way, advisors need to make sure their clients understand the consequences and factor them into their financial plans.

“If you are single, you will not be able to take advantage of pension income splitting, but you may be more likely to qualify for social assistance benefits, like guaranteed income supplement (GIS),” Van Cauwenberghe says. “Those benefits are paid out based on family income so if you are a low income person but in a relationship, it is possible you will be cut off from GIS because of your pooled income.”

It's likely that becoming single after a long marriage or partnership is going to be a highly emotional and traumatic experience. Just getting through each day can seem overwhelming and dealing with things like the financial plan often fall to the bottom of the list of priorities. It’s in times like these that an advisor can really prove their value.

“I have seen situations where people have been so emotionally overwhelmed that they haven’t even applied for survivor death benefits or dealt with things like paying off credit card debt, even though they had proceeds to do so,” Van Cauwenberghe says. “These clients need to feel comfortable enough to sit down with an advisor and get the help they need through what is going to be an extremely difficult period.”

Van Cauwenberghe urges advisors to ask open ended questions to find out their single clients’ concerns and goals, because they are likely to be different from someone in a traditional relationship.

“If you don’t ask those questions and allow the client to express themselves, you may miss the boat,” Van Cauwenberghe says. “It really is about making sure the client has some sort of safety net or emergency fund that they can access if an unexpected event happens.”

Related stories:
The challenges faced by single clients
The unintended impact of the government’s tax proposals