Expert reveals 4 ways that childfree people can plan their money differently

People who aren’t interested in having children often do so for financial reasons. But mostly, they choose to not have children because they believe it doesn’t suit their lifestyle. Reddit’s r/childfree thread hosts 1.4 million members who perform annual demographic surveys. Their research shows that 73% are female respondents, and 76% are millennials/Gen Zers, ages 19-34.

Videos with #childfree TikTok tag have collectively received 212 millions views. Creators include young women explaining their decisions not to have kids, and women older than 50 sharing their joy with their decision to be childfree.

Jay Zigmont CFP, Ph.D. is a financial advisor who specializes is childfree wealth management.

Here are four key differences in financial planning that couples with children and those without children should take into consideration.

  1. The tax implications for estate planning and retirement savings

Zigmont highlights the fact that most retirement savings accounts are set up to allow you to pass on that money to future generations. “You can gift an estate worth up to $12.06million, with no tax effect,” Zigmont states. Many people will not realize the gains they have made in their 401 (k) or other estate components and pass them on to the next generations.

Unrealized gain is the amount that an investment such as gold or bonds has earned over the original investment. It is possible for the next generation to gain access to these funds by setting up 401(k), an estate component.

Zigmont says, “Many childless individuals are planning to either spend it all, or give their estates away to charities.” Charitable donations can be tax-free, but if the money is going to be spent before you die, then you’ll need to pay taxes on the unrealized gain for the rest your life.

Zigmont suggests consulting a retirement- and estate planner who can help you understand the childfree lifestyle and avoid fees and tax by keeping your funds out of traditional IRA or 401(k) accounts.

  1. No matter whether you require life insurance

“What’s it worth having life insurance if people are counting on you to give them money?” Zigmont says. Zigmont explains.

This doesn’t necessarily mean that you won’t need life coverage if you have children. For any cost your business might be incurred due to your death, disability, or even death, small-business owners who are not children might still need life coverage. If you’re a parent with no private student loans, a life policy might be necessary to ensure that any relatives who cosigned the debt do not become liable for it. A life insurance policy could also help a spouse pay the bills if they are dependent on your income.

However, if your children are not in your care and you have other plans to manage them, you might be able to redirect your life insurance funds towards the things you are passionate about or save money for future healthcare costs.

  1. How much should you save to lower healthcare costs later in the life?

One of the most difficult questions the childfree community will face is: Who will look after you when your time is up? Zigmont and his wife are childfree. Zigmont says that he will take care himself by selecting the most suitable healthcare plan and saving money for any additional costs. Persons who are not childfree may need help saving for at-home care, assisted living facilities, and funeral expenses later in their lives.

Zigmont recommends childless people consult with a financial adviser to find the best savings plan that will help them reach their healthcare savings goals.

  1. Be sure to select a healthcare proxy before you actually need it

Zigmont asserts that hospitals are often confused when parents don’t make the decisions. A trusted friend should be chosen to act as your proxy for healthcare when you’re ill. A healthcare proxy, also called a power to attorney for healthcare, is someone who makes healthcare decisions on behalf of you. Healthcare proxy forms differ from one state for each state. Some states may require a notary or lawyer while others may require witnesses.

You don’t want to just have casual brunch talk. However, you should This isn’t casual brunch talk. But you should have a conversation about your preferences and let them know your needs so they can make the best financial and medical decisions if you are ill.