How Finances Are Different for Those Without Children

Oct 3 / Matt Gray, CFP®

Modern society has been built around the idea that each of us is expected to someday be a parent. I legitimately started getting ads for diapers at age 25 (did Google think I still needed them? Fair play, Google), and I don't have, want, or plan on having children.

According to Pew Research, 44% of non-parents between 18 and 49 say they are very unlikely or entirely unlikely to have children in the future. 56% of those, according to the same study, said they don't want kids.

Multiple factors, including financial difficulties, climate change, and women kicking ass in the workplace, are resulting in fewer people wanting to have children. Why isn't society adapting to the needs of this large portion of the population? Why is financial planning still so focused on principles used for people with children? People without children have much different financial needs.

Long-Term Care Insurance

In a survey of parents, 55% said they expect their kids to take care of them. Of course, Childfree people don't have that expectation and so they need to seek other options for care as they age. Enter long-term care insurance.

Long-term care insurance pays for moderate to significant ongoing care often needed during things like cancer treatment or dementia. There are specific criteria to qualify for the benefit, but it boils down to "Can you live on your own?".

Many people are aware of long-term care but are unsure if and how much they need. Childfree people will likely need to start planning for these eventualities earlier than those who think they might have other options.

Do you want in-home care? Skilled nursing facility? What's your family medical history? What are the costs of these facilities? How much do you have in assets to cover such a health event?

Savings Strategies

One of the most often claimed reasons for people not wanting to have children is the freedom it affords. Not only do those without children typically have fewer expenses, but they also have more time for travel, alternative career paths, and passion projects/hobbies.

This has influenced alternative lifestyles, such as the FIRE (Financial Independence, Retire Early) movement. No longer are the days of graduating college, working a 40-year career, and receiving a pension at retirement. Pensions have mostly vanished, and 40-year careers are on the way out, at least for those without children.
Because of this change, financial advice is more than just stashing money in a 401K seeing as you can't access those dollars until you reach age 59 1/2. What happens if you take 3 years off to travel or join the peace corps in your mid-40s? You need a different strategy when it comes to saving to match your flexible life.

Brokerage investment accounts and other accessible funds are often more important to consider while balancing the tax benefits of retirement accounts.

Charitable Giving

The Childfree community doesn't typically have obvious heirs, so where does their wealth go when they pass? Well, many want to spend it down to $0 and have "the last check bounce." Others have intentions to make a significant impact on the causes they care about.

If you want to make a difference by giving to charity, there are a lot of questions to ask, such as if you want to give while living or just whatever is left when you're gone. Which assets do you want to give? Do you have one or many charities you want to impact? How can you make the biggest impact?

It isn't that this is purely a question for the Childfree, but a much more prominent one for those without heirs.

Risk Tolerance

If you ask an advisor about risk tolerance. they'll likely regale (😂) you about questionnaires, life stages, and volatility. While those aspects are certainly relevant, being childfree flips those concepts upside down. Not having children allows for a person to take quite a bit of risk, with the consequence only affecting themselves.'

I'm Childfree, and months after a kidney transplant and extensive medical bills, I launched my own firm with the mindset of, "If I completely fail, I'll be out $30K cash and a year's salary". That is a significant luxury, not many families can afford.

And More...

There are more financial needs for those without children than can be mentioned in a single article, but the differences echo throughout the entire financial picture. The financial equation is completely different when one is responsible for only themselves, as it results in different risks and different opportunities.

About the Author - Matt Gray is a Childfree Financial Planner who holds both the Certified Financial Planner® designation and the Chartered Advisor of Philanthropy designation. He enjoys working with his Childfree peers because he enjoys helping solve the specific needs of the Childfree community. Furthermore, he believes choosing a less traditional life path leads to more unique life stories and he loves helping those stories become a reality. Matt co-hosts the Childfree Life and Money Podcast with Dr. Jay.