4 practical tips for adjusting your financial plan if you’re single

So, with that in mind, read on to discover four practical tips for adjusting your financial plan if you’re single.

Single retirees generally need more income in retirement compared to those in a couple.

A report in the Guardian found that a single pensioner would need a minimum of nearly £3,000 a year more than an individual in a couple, and could need over £10,000 a year more to sustain a comfortable retirement.

While this may sound like a lot, making small changes to your pension contributions can make a considerable difference over time due to the effects of compounding.

So, if you are single, you might want to make additional contributions to your pension when you can or explore schemes such as salary sacrifice, which improves the tax efficiency of your pension contributions.

You could also consider postponing your retirement or phasing into it by going part-time at the end of your career. Doing so can substantially boost your pension savings, as it allows for extra contributions while also reducing the number of years you’ll rely on your pension, ultimately boosting your financial security in retirement.

As always with pensions, it’s important to remember they are a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

Individuals in couples have lower overall expenses and a significant advantage in saving, as they can pool their resources and effectively save twice as much for long-term goals.

In contrast, single individuals need to be more vigilant about spending and financial priorities to ensure they’re not overspending in areas where adjustments can be made.

To manage costs, you can start by reviewing recurring expenses to ensure you’re only paying for services you actively use, rather than automatically renewing subscriptions or contracts that might be available at a lower rate elsewhere.

You may also be able to find household bills you can cut down. For example, installing a smart meter can help you monitor your energy usage and identify opportunities for saving, while a water meter can often provide a more economical way to manage water consumption when living alone.

While these may sound like minor changes, they can add up, and if you reinvest the money you save wisely – into your pension, for example – it could make a considerable difference over time.

In the 2024/25 tax year, UK residents have a £325,000 nil-rate band, which is the threshold above which Inheritance Tax (IHT) becomes payable. In addition, there is a £175,000 residence nil-rate band, offering extra relief if you pass your main residence to direct descendants.

So, the total combined value of the two nil-rate bands is £500,000.

Married couples and civil partners can transfer their allowances to one another upon death, effectively creating a collective nil-rate band of £1 million.

In contrast, if you are single (or unmarried), you cannot combine your nil-rate bands with another, meaning a larger portion of your estate may be subject to IHT.

However, there are steps you can take to help overcome this discrepancy.

An effective way to reduce the IHT burden on your estate is by making gifts during your lifetime. By transferring money or assets while you’re still alive, you can reduce the overall value of your estate, which in turn lowers the potential IHT liability on your legacy.

This strategy not only helps maximise the amount passed on to your loved ones but also provides them with financial support during your lifetime.

If you want to revisit your estate plan for better tax efficiency, an Amber River financial planner can help you find the most effective strategies to minimise your liabilities.

There are certain other tax advantages to being married or in a civil partnership that single people miss out on.

For example, some married couples can transfer any unused portion of their Personal Allowance to their partner, potentially allowing for a lower overall tax bill. Spouses can also strategically share their Dividend and Personal Savings Allowances, and they can transfer assets between each other without being liable for Capital Gains Tax (CGT).

So, as a single person, it’s important you make full use of the reliefs and tax-efficient savings you’re eligible for.

If you live alone, you may qualify for a 25% Council Tax discount. Moreover, it is a good idea to ensure you make the most of all your tax-efficient savings allowances, such as ISAs and pension contributions.

An Amber River financial planner can help you optimise your finances as a single person by offering personalised advice on managing your expenses, maximising your savings and investments, and planning for your long-term financial security.

They can assist you in creating a budget that reflects the unique costs of living alone, recommend strategies to manage your expenses, and ensure you’re making the most of your financial allowances.