Having a financial plan can help you to achieve your financial and life goals.

As financial planning is designed to focus on your specific ambitions and targets, no two people will ever have the same financial plan. Your individual life circumstances affect factors such as how much you need to save for retirement, what risk profile you have, what financial protection you need, and much more.

One major factor that can affect your plan is your marital status – if you are single there are several practical reasons your plan needs to be different. Read on to find out why.

Make sure you’re making the most of the tax allowances available to you

If you are single, it’s important you make the most of the tax breaks available to you. There are plenty of ways you can make your finances more tax-efficient, but unlike married couples you can’t benefit from tax allowances shared with a spouse.

As an example, married couples or those in a civil partnership could transfer assets between one another to reduce their Inheritance Tax and Capital Gains Tax bills, and can also benefit from tax breaks such as the Marriage Allowance.

So, if you’re single, it can be beneficial to maximise your use of the various allowances available to you – for example, your annual tax-efficient ISA subscription, your Dividend Allowance, or your Capital Gains Tax Annual Exempt Amount.

At Solus, we specialise in working with single clients and we can help you to make the most of the tax breaks available to you.

Health and income protection can be a source of financial and emotional support

As a single person, you will likely be solely responsible for providing for yourself, your household, and any other financial dependents you may have. Because of this, it is important that you plan for the event that you become ill and are unable to work, and even for the event of your death.

Without your regular income, you don’t have a second income of a partner to fall back on. So, consider whether you would be able to pay essential bills like your rent or mortgage, utilities, and so on if you had to take an extended period off work.

If you care for children or other dependents, will they be provided for financially in the event of your death?

Life insurance, income protection insurance and critical illness cover can provide peace of mind for you and your family and can be a great source of financial and emotional support in difficult times.

You may need to contribute a greater proportion of your income to your pension

Planning for retirement as a single person requires a slightly different approach to that of a married person.

As you will know, single people do not have the luxury of sharing costs such as rent or mortgage payments, utility bills, insurances, and other regular outgoings. As a result of this, Forbes reports that single people need a higher income in retirement than married people to achieve the same standard of living.

To achieve a moderate retirement standard of living – which allows for a car and a two-week foreign holiday each year – a single person would need an annual income of £23,300, and a couple would require a shared annual income of £34,000.

The research indicated that single people may need to save a greater proportion of their income to achieve their desired living standard in retirement. This may require a different financial strategy when compared to a married individual during your working years.

The gender pay gap can make this problem even more pronounced for single women.

As reported by Professional Adviser, single women in the UK face a 40% gender disparity in personal pension income compared to single men, as of September 2023. This may mean that single women need to save a greater share of their income than single men during their working lives to meet their retirement goals.

Saving can be harder for single people

As you read above, single people may need to save more than their married counterparts in order to achieve the same standard of living in retirement.

However, the very reason for this – namely being solely responsible for your bills – can also make it harder to save during your working life.

The Week reports that, according to analysis from Hargreaves Lansdown, a single person spends around £1,851 on monthly household bills whereas a person who is part of a couple spends around £991. That’s a big difference.

A higher outlay on bills may mean less of your income can be allocated to saving. If you are single and worried you may not be saving enough for retirement, it may be a good idea to speak to a financial planner about how to meet your savings goals.

Take steps to make it easier to get the mortgage you need

Applying for a mortgage on a single income means you may be eligible for a smaller mortgage than if you were to combine your income with a partner or spouse. And, as you have read, you are likely to have higher expenses than individuals in couples, which may also reduce the affordability of a home loan.

If you are a single person who is looking to take out a mortgage to buy a property, here are some useful tips that could make it easier to get the mortgage you need:

  • Taking out a longer-term mortgage can enable you to borrow more money.
  • Shared ownership mortgages allow you to take out a mortgage on a portion of a property owned by a housing association. This means that you need to borrow less than if you were to buy the entire property.
  • Using a “family” mortgage or finding a guarantor can enable family members to provide additional security to help you buy.
  • Buying with a friend means you can pool your income and borrow a larger sum together.

Get in touch

If you are single and want to build a financial plan to help you achieve your life goals, we can help.

As a financial planner in Essex, we have wide experience in helping single clients to build a bespoke financial plan. To find out more, please email hello@solusfinancial.co.uk or call us on 01245 984546.

Please note

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

Note that financial protection 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.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

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 results.

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. 

The value of your investment 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. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

Workplace pensions are regulated by The Pension Regulator.