Adults who do not have children tend to have more financial flexibility to pursue their goals throughout life and retirement. This makes sense when you consider the cost of raising a child from birth to adulthood is currently estimated at $233,6101 (and that’s before you factor in college). But even without these expenses, childless singles and couples still need to manage their future financial needs.
Many mistakenly assume the absence of heirs removes the weight of retirement and legacy planning from their shoulders. If you are an adult without children, don’t fall victim to this myth. Financial planning is just as important for you as it is for anyone else. As a financial advisor, Arias & Partners Wealth Advisors encourages clients who don’t have children to take the following actions:
Prioritize saving for retirement. Without the need to save for childcare, sports leagues or a college fund, consider doubling-down on your savings for retirement. You have the potential to spend decades in retirement pursuing your hobbies and goals. Calculate what it will take for you to live the lifestyle you want and compare it to your current savings. Create a plan to save the difference. Consider contributing as much as you can to your workplace savings plan, if you have one, and consider building up Roth IRA savings to help create a source of income that is potentially tax-free in retirement.
Investigate long-term care insurance. One of the biggest concerns I hear from my clients without kids is who will take care of them later in life. Of course, there’s no guarantee that parents can depend on their kids to support them either, but for nonparents there is no backup plan – they’ll have to make sure their retirement planning accounts for long-term care. So, make it a priority to decide how you will manage healthcare costs in retirement. Medical expenses continue to rise, so it’s important to have adequate savings and insurance coverage. Explore your options through Medicare and your current or former employer to see if long-term care insurance would benefit you. Additionally, consider researching caregiving options and long-term care facilities in your area so you are familiar with the choices if you need them down the road.
Put financial decision-makers in place. Who's going to make financial decisions for you in the case you become incapacitated? It’s important to draw up documents to name a durable power of attorney to look out for your financial interests if you are unable to, including legal and tax concerns. They should be someone you trust, whether that’s a spouse, friend, extended family member or professional. Keep in mind that choosing someone to help watch out for you does not mean you have to share your full financial situation and account numbers. Rather, a common approach is to share enough information so the contact can step in should a situation arise where you need help making financial decisions.
Plan your legacy. With no direct heirs in line to inherit your estate, you will want to consider what you’d like your legacy to be – including how your assets should be distributed upon your death. Just because you don't have children or grandchildren to whom you wish to leave possessions, you may have other family members, friends, or favorite charities you would like to see benefit from your lifetime of hard work. Creating or updating your will is one of the best ways to articulate your wishes. Also consider using trusts, which sometimes allow more flexibility than a will, to help you meet specific legacy goals. Consult with a financial advisor, attorney and tax legal professional to develop a comprehensive legacy strategy that suits your ultimate goals.
1 “Expenditures on Children by Families Report”, U.S. Department of Agriculture
Carlos F. Arias, CRPC ® , CLTC
Private Wealth Advisor
Arias & Partners Wealth Advisors
A private wealth advisory practice of Ameriprise Financial Services, Inc.
An Ameriprise Private Wealth Advisory Practice
Carlos F. Arias, APMA, CRPC ®, CLTC, is a Private Wealth Advisor and Business Financial Advisor with Arias and Partners Wealth Advisors, a private wealth advisory practice of Ameriprise Financial Services, Inc. in Berkeley Heights, NJ.
He specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years.
To contact him,
100 Connell Dr
Ste 2300 RM 233
Berkeley Heights, NJ 07922-2737
Investment advisory products and services are made available through
Ameriprise Financial Services, Inc., a registered investment adviser.
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
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