How Much Money Do You Really Save by Not Having Kids?

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Traditional financial plans often boil down to worrying about children: How much to save for college, how much insurance to buy or how best to set up wills and trusts. That playbook doesn’t work for people who choose not to have kids. A growing number of child-free adults in the U.S. are seeking advice about spending, saving and investing tailored to their situation. Financial advisers have taken notice, and some are building practices around serving their needs. Jay Zigmont, a financial planner in Water Valley, Miss., who specializes in child-free clients, said life insurance usually isn’t a given for those without kids. Far more important is disability insurance, he said, as many of his clients are unmarried and lack a second income to fall back on.

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Nonparents are often less interested than parents in passing on a large estate, Mr. Zigmont said. They may focus more on spending and giving their money away during their lifetimes. Charitable giving is often an important component of their plans, he said. Early retirement is often attainable for them because they may have more savings and fewer expenses, can live in smaller homes and drive smaller cars, financial advisers say. They might be able to pay off their own student loans sooner, and they may have more time to devote to their careers and pursue the work they love.

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Financial milestones often look different for those without children, advisers say. Lauren Zangardi Haynes, a financial planner in Richmond, Va., usually recommends higher-deductible health plans with health savings accounts to stash savings for future pre-Medicare health expenses, for this population. Those without kids may be able survive with leaner emergency funds and can more easily switch careers.

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That said, poverty rates are higher among adults without children than they are among older parents, according to a recent Census Bureau study. The study, which was based on 2018 data, found that about 12.4% of childless adults had family incomes below the poverty line. The study defined childless as those without biological children.

Ms. Zangardi Haynes said several of her child-free clients are expected to help care for their aging parents, since parents and siblings frequently assume they are more free to do so. She helps her nonparent clients who are in their 30s and 40s to understand the impact on their financial plans of an additional $1,000 to $2,000 a month in possible financial support to help their parents for around 10 to 15 years. The need to access savings sooner in life is important for several of her child-free clients who wish to retire in their late 50s. Ms. Zangardi Haynes makes sure her child-free clients have savings outside of traditional retirement accounts that they can access easily in those early years of retirement without penalty.

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https://www.wsj.com/articles/financial-planning-without-kids-means-more-money-different-problems-11652843124 (subscription)