Are there any different financial considerations/rules for a childless couple?

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Lynx310650
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Are there any different financial considerations/rules for a childless couple?

Post by Lynx310650 »

My wife recently found out that she has a health condition that coupled with her age would make pregnancy extremely risky. We were already on the side of not having children, so this pretty much firmly moved us into being childless.

This did get me to thinking that a lot of "conventional" financial advice - especially for couples our age - usually assume children. That makes sense since the vast majority of people do end up having kids. But I read another thread today about a couple asking whether they can afford to buy a home, and some of the responses suggested keeping the possibility of having children into account (may need a larger home, there will be more fixed costs when children are in the picture). So it did make me think what kind of considerations there may be for couples like us that will never have children. Would especially be interested to hear from folks that may have made it to "retirement age" without ever having children and in hindsight what (if any) conventional rules may have been less applicable to them, or maybe what they wish they might have differently in terms of finances.

Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare. Or conversely, would we need to save even more for retirement than parents because we'll never have children that could help us out if we had a financial calamity? Can we afford to maybe have a bit less in our emergency fund than conventional wisdom? Things like this are on my mind.
sailaway
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Re: Are there any different financial considerations/rules for a childless couple?

Post by sailaway »

You can take more risks if other people don't depend on you.

I suppose there is no reason you couldn't push limits, assuming that the rules were written for people who need new clothes for growing bodies every six months and feel obligated to fund a college education. However, that seems like a slippery slope if you apply it to housing and cars and vacations and etc.

Instead, we just see it as giving us more options. Rather than breaking all the rules of thumb, we just make sure we save up before indulging. For us, it is the boat, but if you want more house than your salary would generally support, you just save up more than the minimum down payment before you get it. Even if you don't put that savings directly towards the house, it provides a buffer and voila, you have your dream house without being house poor. You have leeway on timing, because you aren't in a rush to get into a good school district before the kids start to make friends.

You certainly can't have my less in your emergency fund, as one usually uses a months of expenses calculation for that. You can reduce your expenses, but they are still the basis for your EF.
Last edited by sailaway on Sun Sep 06, 2020 9:09 pm, edited 1 time in total.
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Bogle7
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Bogle7 »

Yes..
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Re: Are there any different financial considerations/rules for a childless couple?

Post by mega317 »

(Disclaimer, I do not fit the profile you requested--I'm not retired and I do have kids.)
You mentioned housing twice in your post. Are you asking about rules of thumb? Like the common rule of thumb of mortgage 3x income, could you stretch that? I think the answer is yes, but rules of thumb are so imprecise as to often be next to meaningless (and in house affordability especially so).

Money is a tool to reach goals. "You can have anything you want but not everything." So you can have several hundred thousand dollars worth of things more than someone with kids and similar income. That could be years of your life--early retirement--or experiences or objects. But I guess the point I wanted to make with my post is that rules of thumb are not made with kids in mind or not in mind, they are just imprecise and often unhelpful constructs.
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oldfort
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Re: Are there any different financial considerations/rules for a childless couple?

Post by oldfort »

Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare.
I would go with spending less money on housing if you never plan on kids. What's the point in getting a four bedroom house if two of the bedrooms are going to be empty all the time?
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Re: Are there any different financial considerations/rules for a childless couple?

Post by 000 »

No safety net in old age.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by revert »

oldfort wrote: Sun Sep 06, 2020 10:07 pm
Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare.
I would go with spending less money on housing if you never plan on kids. What's the point in getting a four bedroom house if two of the bedrooms are going to be empty all the time?
Somewhat related, I'd use the fact that you don't care about school zones to save on housing costs as well. At least where I live, the difference of a few blocks can mean a significant decrease in price with the same quality of housing stock due solely to district zoning.
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changingtimes
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Re: Are there any different financial considerations/rules for a childless couple?

Post by changingtimes »

As formerly half of a childless couple and now a childless widow (DH died at 55, when I was 50), I can mention a few things:

Yes, you will find it rare that your situation is ever discussed in general retirement planning books, articles, forum posts, etc. But as you have figured out, without having to save for college but also just not incurring the expenses of child-raising means that your money will "go farther" then people making the same amount who have kids.

Be prepared to hear "huh, must be nice" when you tell your friends with kids about some vacation you took or some luxury item you bought.

Do both of you work? Can one or the other survive on a single salary? We kept our home that we bought in 1995 because we loved the small mortgage (especially as the neighborhood took off), with the extra money allowing us to travel a lot. The small mortgage also meant that when DH died I wasn't suddenly having to move out of our house. (though we also maxed out our 401ks for many years, so the nest egg we were building for the both of us to retire early became plenty for me)

Keep in mind that the surviving spouse will probably need to spend more in their later years on health care and being looked after, because yes, as someone said above, there's no safety net. The survivor may need to hire someone to do the sorts of things that kids do--driving to doctors' appointments, coming over to help with small tasks during an illness, etc. It's also likely that a continuing care community would be looming, and those aren't cheap. And also keep in mind that the surviving spouse could be on their own for a lot longer than you might care to think about.

A lot of retirement planning discussions center around parents wanting to leave an inheritance for kids or grandkids. Unless you have a certain idea in mind for donating your millions once you are both gone, your biggest frustration will probably be trying to figure out how you can spend it all while making sure you don't go broke any sooner than on the way to the cemetery.

I'm sure there's more. Would love to see others without heirs chime in.
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celia
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Re: Are there any different financial considerations/rules for a childless couple?

Post by celia »

Your estate planning will be different.

You will be able to drive a smaller car, as you'll not have to pick up a high school sports team!
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Re: Are there any different financial considerations/rules for a childless couple?

Post by camillus »

You will have more discretionary income. This could lead to increased consumption or accelerated retirement. There are many "childless FI" groups on facebook.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by oldcomputerguy »

This topic is now in the Personal Finance subforum. -- mod oldcomputerguy
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Re: Are there any different financial considerations/rules for a childless couple?

Post by TomatoTomahto »

Part of why my wife continues to work is that she wants to a) leave an inheritance for the kids and b) be able to lhelp them out financially. (Mostly it’s an excuse, because she enjoys working and the kids are launching well).

If you don’t have family members (siblings, parents, etc.) who might rely on you for financial support, it can shorten the runway.
Okay, I get it; I won't be political or controversial. The Earth is flat.
Kelrex
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Kelrex »

No, not really.

The more you understand personal finance, the more you understand that it's entirely personal and that there are no rules.

There are vague guidelines that suggest rough parameters for risks, but they are truly, very, very rough estimates that should never be followed as actual rules.

The 3X income for housing "rule" might be conservative for one and insanely reckless for another. Same with the 4% rule. It all depends on the context and circumstances.

Take each "rule" or recommendation and try to understand it as it applies to your unique situation. Only then can you make fully informed decisions. This applies to everyone.

A couple with kids is not necessarily more financially similar to another couple with kids compared to a couple without them.

Two couples where both spouses are doctors are going to be far more similar to each other financially regardless of kids compared to a couple where both spouses are teachers.

Kids are just a factor, and they may influence how much life insurance you feel you need, how much house you feel you need, where you live because of school districts, and how you estate plan. However, a lot of other factors influence those things as well.

Overall, not having kids will provide you A LOT more lifestyle flexibility, but that's not really captured by clear metrics and rules. It's just more of a general concept.

So don't worry that the advice out there doesn't apply to you. Truthfully, it doesn't really realistically apply to anyone. Each person needs to understand their own risks in order to make the best decisions, whether they have kids or not.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by fourwheelcycle »

OP's question raises a related question - do people, BH's as a group or any people, manage their finances according to rules of thumb or according to their own inclinations?

When I became familiar with this forum I was surprised by the number of posts that ask "Can we afford this big home?" or "Can we afford this expensive car?" I was struck that, based on their own inclinations, the posters seemed inclined spend as much as BH rules of thumb or best financial practices would allow. In contrast, my wife and I have always been inclined to spend as much we feel we need to for what we consider a modest lifestyle, and save whatever money is leftover. BHs call this a rule of thumb as well, labeling it as LBYM. We never consciously aimed for LBYM, we just spent the way we had seen our parents spend.

We have good friends who are childless. As we grew through our careers in adjacent homes we obviously shared our experiences. Our typical main annual vacation was a family drive, not an air flight, to a national park. Our friends' main annual vacation was typically a flight to Italy or Hawaii. We still live in the same home where we raised our children; our friends have moved on to a home that is about double the cost of ours, or of their initial home that is still next door to us. We tease each other about our spending patterns, but we remain good friends.

I don't think the OP is asking for permission to spend right up to some type of BH rule of thumb or best financial practice. OP's own inclination may be LBYM, or spend to the limit, recognizing they do not need to worry about costs related to raising children. OP's preference is not explicitly revealed by their question. I am just commenting that as I read the breadth of posts on this forum I definitely see some posters who are inclined to LBYM and others who are inclined, as they sometimes say, to spend their last dollar just before they die.

I make no value judgement on this difference in personal inclination. I do think everyone (who can afford to) has a responsibility to manage their finances so there is at least a dollar left or recently spent when they die, but beyond that there is no great arbiter in the sky who advises on the "right" answer to this question.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by houseofnine »

I don’t think the considerations would be any different than the Bogle-esque and common sense things you normally see on this site. You might consider putting a portion of the money you would’ve spent on child rearing into a Long Term Care Insurance policy when you are in your 50s or so.

Perhaps more important is exposure to young people throughout your lifetime. Although not financial, I feel like it is important to have interaction with folks younger than me, including children. You may get this through your nieces, nephews, etc., but sometimes requires volunteering, etc.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Wricha »

Retired and no kids. Lived in a modest 1500 sq ft house most of our working life. Now not so modest homes (3) in vacation spots. I think the no kids, allows you much more freedom to do things and take bigger financial risks. We travel to remote parts of the world (stayed in 5 star or dumps) kinda didn’t matter. Took bigger risk in the job market (became self employed and never looked back) invested in many real estate deals the average guy with a family would have avoided. Advice: Parlay your independence into financial gain and live it up.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Ramjet »

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Tourne
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Tourne »

A lot of good advice in this thread so far, in particular from "changingtimes". DW and I have also chosen not to have kids, with medical issues a significant part of the consideration. We're not yet retired, but are getting close to our financial independence/work optional goal. OP, I know you were mainly asking for financial advice, but here are a couple of things we've encountered on our journey.

On the financial side:
- Without children in the picture, it makes it much easier to get a sense of what your spending levels will be post-retirement. This makes retirement/FI planning easier.
- As several posters have said, you now have more flexibility in determining your balance between current consumption vs. saving for FI. Up to your personal preferences on where that balance falls.
- As "Wricha" and others said, not having dependents in the mix may allow you to take more risk. For instance, the fact that we do not have children was one factor DW and I used in determining our asset allocation. We increased our allocation to stocks, knowing that we did not have to worry about college costs.

On the non-financial side:
- Precisely because we know we will not have anyone to rely on later in life, we have had to do a lot more research on estate/trust/custodian issues than we might otherwise have had to at this stage of our lives. I wanted to make sure we had these issues sorted relatively early, so that DW does not have to sort them out on her own if something happens to me.
- We still have a decent level of term life insurance, mostly because my salary is significantly larger than DW's. So while DW technically wouldn't "need" that much if something happened to me, we still wanted to make sure she has nothing to worry about.
- One of the most challenging things has been "losing" many of our friends as they get sucked into child-rearing. You will find that you just have a lot less in common with those folks, and many of them have trouble talking about anything other than their kids. Much of their lives will revolve around school activities/birthday parties/play dates. This is totally understandable - it is a massive undertaking. DW and I are optimistic that we will be able to re-connect in a meaningful way with some of these friends once their kids are a bit older. But for now, we've focused on connecting with other couples who also do not have kids. For instance, a few years ago we went with another couple on a one-month trip to Borneo and Bali. It was an amazing adventure, but not something any of our friends with kids would have been able to swing, regardless of their financial situation.

Good luck on your journey.
-Tourne
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Re: Are there any different financial considerations/rules for a childless couple?

Post by BogleFanGal »

BogleFanGal wrote: Mon Sep 07, 2020 10:46 am
Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm My wife recently found out that she has a health condition that coupled with her age would make pregnancy extremely risky. We were already on the side of not having children, so this pretty much firmly moved us into being childless.

This did get me to thinking that a lot of "conventional" financial advice - especially for couples our age - usually assume children. That makes sense since the vast majority of people do end up having kids. But I read another thread today about a couple asking whether they can afford to buy a home, and some of the responses suggested keeping the possibility of having children into account (may need a larger home, there will be more fixed costs when children are in the picture). So it did make me think what kind of considerations there may be for couples like us that will never have children. Would especially be interested to hear from folks that may have made it to "retirement age" without ever having children and in hindsight what (if any) conventional rules may have been less applicable to them, or maybe what they wish they might have differently in terms of finances.

Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare. Or conversely, would we need to save even more for retirement than parents because we'll never have children that could help us out if we had a financial calamity? Can we afford to maybe have a bit less in our emergency fund than conventional wisdom? Things like this are on my mind.
Interesting thread. The number of childless singles and couples - by choice or by circumstance - has actually grown a lot in the past few decades and will continue to grow, based upon what I've read. It's a larger group than most people think. To me, it seems this is a largely ignored and underserved audience from both a financial and healthcare perspective. There are some unique needs and likely more financial ability to fulfill those needs, if more trustworthy, reputable options become available. (Thinking about issues related to safeguarding their interests/safety in hospitals or care facilities, POA options when there's no capable family/friends, etc....issues in the elderly years)
"Life would be infinitely happier if we could only be born at the age of eighty and gradually approach eighteen." Mark Twain
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Re: Are there any different financial considerations/rules for a childless couple?

Post by whodidntante »

- Your expenses during accumulation will be significantly lower, and your need for life and disability insurance reduced proportionally. No cars to buy, no weddings to pay for, no down payment gifts, no school trips, no medical insurance and no medical bills, and no food for the absent children.
- More flexibility in where you live. Schools? We don't care, honey. Maybe buy in that cheaper neighborhood. Also, you don't need a large house so the purchase price, taxes, and maintenance should all be lower. Wanna live as a highly compensated expat in India for two years? Sure, why not?
- Later in life, you will need to be more self sufficient. I recommend staying as fit as possible. And things you could call your daughter for, now you'd better be able to handle it yourself, or pay someone to handle it for you. This means your expenses later in life may be higher. Although I think some people overestimate what their children will do for them when they are old.
- If you end up with a big ol' bag of money, you'll need to figure out who gets it when you croak. Maybe it's someone else in your family, maybe it's disease research, or maybe you want a building named after you for 25 years until someone gives more money.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Kookaburra »

Tourne wrote: Mon Sep 07, 2020 8:41 am A lot of good advice in this thread so far, in particular from "changingtimes". DW and I have also chosen not to have kids, with medical issues a significant part of the consideration. We're not yet retired, but are getting close to our financial independence/work optional goal. OP, I know you were mainly asking for financial advice, but here are a couple of things we've encountered on our journey.

- Precisely because we know we will not have anyone to rely on later in life, we have had to do a lot more research on estate/trust/custodian issues than we might otherwise have had to at this stage of our lives. I wanted to make sure we had these issues sorted relatively early, so that DW does not have to sort them out on her own if something happens to me.
I am in a similar situation as the OP. Would you mind elaborating a bit on what you mean by estate/ trust/custodian issues as they relate to married couples without kids?

The thing that keeps me up at night is knowing that one of us will eventually pass first, leaving the other single and childless in old age. And then as that person gets older and possibly suffers physical or mental decline, how to ensure they have help and someone trustworthy to help with any financial matters. Is this what you mean by custodian?
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Re: Are there any different financial considerations/rules for a childless couple?

Post by visualguy »

Kookaburra wrote: Mon Sep 07, 2020 11:27 am
Tourne wrote: Mon Sep 07, 2020 8:41 am A lot of good advice in this thread so far, in particular from "changingtimes". DW and I have also chosen not to have kids, with medical issues a significant part of the consideration. We're not yet retired, but are getting close to our financial independence/work optional goal. OP, I know you were mainly asking for financial advice, but here are a couple of things we've encountered on our journey.

- Precisely because we know we will not have anyone to rely on later in life, we have had to do a lot more research on estate/trust/custodian issues than we might otherwise have had to at this stage of our lives. I wanted to make sure we had these issues sorted relatively early, so that DW does not have to sort them out on her own if something happens to me.
I am in a similar situation as the OP. Would you mind elaborating a bit on what you mean by estate/ trust/custodian issues as they relate to married couples without kids?

The thing that keeps me up at night is knowing that one of us will eventually pass first, leaving the other single and childless in old age. And then as that person gets older and possibly suffers physical or mental decline, how to ensure they have help and someone trustworthy to help with any financial matters. Is this what you mean by custodian?
There are a number of threads on this. People trying to set up solutions using a combination of trust companies, fiduciaries, trust protectors, etc. to manage money and bill payments after they stop being able to do it (dementia, etc.) Also, trying to avoid dangerous conservatorship situations. These threads don't seem to converge on a good solution. The conclusion appears to be that you ultimately need trusted family involved to some extent in finances (as well as care). Maybe nieces/nephews if there are no kids.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Saving$ »

revert wrote: Sun Sep 06, 2020 10:19 pm
oldfort wrote: Sun Sep 06, 2020 10:07 pm
Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare.
I would go with spending less money on housing if you never plan on kids. What's the point in getting a four bedroom house if two of the bedrooms are going to be empty all the time?
Somewhat related, I'd use the fact that you don't care about school zones to save on housing costs as well. At least where I live, the difference of a few blocks can mean a significant decrease in price with the same quality of housing stock due solely to district zoning.
This. You can buy a house you like in a neighborhood you like, but in an are that perhaps is across "the line" from the good school district or zone. In my area, there are $1 mil+ houses "across the tracks" within in 1-4 blocks of the desirable school district. They would be $1.4 mil houses in the desirable district. People whose kids are out of school, who will never have kids, or who will send kids to private school no matter what buy these houses. I've seen these "hot" neighborhoods evolve over the last 30 years all around the good district, that is adjacent to 4 other districts/zones of varying quality.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Tourne »

Kookaburra wrote: Mon Sep 07, 2020 11:27 am
Tourne wrote: Mon Sep 07, 2020 8:41 am A lot of good advice in this thread so far, in particular from "changingtimes". DW and I have also chosen not to have kids, with medical issues a significant part of the consideration. We're not yet retired, but are getting close to our financial independence/work optional goal. OP, I know you were mainly asking for financial advice, but here are a couple of things we've encountered on our journey.

- Precisely because we know we will not have anyone to rely on later in life, we have had to do a lot more research on estate/trust/custodian issues than we might otherwise have had to at this stage of our lives. I wanted to make sure we had these issues sorted relatively early, so that DW does not have to sort them out on her own if something happens to me.
I am in a similar situation as the OP. Would you mind elaborating a bit on what you mean by estate/ trust/custodian issues as they relate to married couples without kids?

The thing that keeps me up at night is knowing that one of us will eventually pass first, leaving the other single and childless in old age. And then as that person gets older and possibly suffers physical or mental decline, how to ensure they have help and someone trustworthy to help with any financial matters. Is this what you mean by custodian?
Indeed, something to keep one up at night. Then again, I know plenty of people who won’t be able to rely on their offspring in their later years.

We’re still in the research phase, but it looks like it will include some combination of a lifecare facility (where you can transition from assisted living to nursing care), a very clear set of health care directives, an irrevocable trust that can’t be changed when we are no longer able to take our own financial decisions, and a well-considered will. Another option we have considered is purchasing a SPIA that will (along with our pensions and SS) cover the cost of the lifecare facility, then giving the remainder away while we are still capable of making our own decisions. One of the organizations to which we intend to donate (a university), is now offering a SPIA, so that might be an option, since some of the money will go there eventually anyway.

But as BogleFanGal said, these will all have to be stitched together - there really is a gap in the market right now. We may also send a letter to the charities we intend to donate to upon our deaths - that may give them an interest in making sure nothing too untoward happens to their future donations. :twisted:
Plans are nothing; planning is everything - Dwight D. Eisenhower
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Re: Are there any different financial considerations/rules for a childless couple?

Post by sailaway »

I have known too many people who end up single and childed, but without support, to consider most of these issues specific to being childless.
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1210sda
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Re: Are there any different financial considerations/rules for a childless couple?

Post by 1210sda »

This is a very good post/thread.

I agree that some (many?) overestimate what their kids will do for them in their old age.

Yet, in spite of that, we still worry about their college, their first house, their inheritance.

Sometimes I wonder if those who are childless are better off. At least you know what to expect or not expect. Those with offspring may think they know what to expect, but as other posters have stated, you may be surprised.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by visualguy »

1210sda wrote: Mon Sep 07, 2020 2:56 pm This is a very good post/thread.

I agree that some (many?) overestimate what their kids will do for them in their old age.

Yet, in spite of that, we still worry about their college, their first house, their inheritance.

Sometimes I wonder if those who are childless are better off. At least you know what to expect or not expect. Those with offspring may think they know what to expect, but as other posters have stated, you may be surprised.
Those who are childless are in a very extreme situation in old age. It is nothing like the situation with children unless the children are completely alienated from their parents, which is very rare. Children who don't want to become their parents' caregivers are fairly common, but children who won't help with managing and monitoring their parents' care and finance are rare. Beyond the emotional bond, there's also a financial incentive typically (inheritance-related) for children to put it in this effort.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by marcopolo »

oldfort wrote: Sun Sep 06, 2020 10:07 pm
Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare.
I would go with spending less money on housing if you never plan on kids. What's the point in getting a four bedroom house if two of the bedrooms are going to be empty all the time?
There is more to the pricing of a house than its size.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by sailaway »

marcopolo wrote: Mon Sep 07, 2020 4:02 pm
oldfort wrote: Sun Sep 06, 2020 10:07 pm
Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare.
I would go with spending less money on housing if you never plan on kids. What's the point in getting a four bedroom house if two of the bedrooms are going to be empty all the time?
There is more to the pricing of a house than its size.
And there are more things to do with bedrooms than to fill them with kids. Without children to care for, someone may have time for more hobbies that require more space...
LittleMaggieMae
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Re: Are there any different financial considerations/rules for a childless couple?

Post by LittleMaggieMae »

As to all the "dire consequences" of a childless couple not having anyone to care for them (or handle their care) in their old age - I would hope that people don't live such lonely empty lives while they were getting to "old age" only interacting with their spouse and a parade of coworkers.

Perhaps since the couple doesn't have children of their own - they might be able to take more time/build relationships/share experiences with extended family and their kids (nieces/nephews). Or perhaps if the childless couple has, oh, I don't, friends who have kids they would get to build relationships/shared experiences with the next generation. As the youngest in the family, a singleton, and childless... I strongly suspect my siblings and their spouses will be dead an gone by the time I need 'old age support/help/decisions made'. I suspect I will be relying on one of the nieces or a nephew in my old age. I took an interest and the time to be "family". I will do whatever I can to make it as easy as possible for who ever I choose to look after my affairs when I can no longer do it. The who ever will most likely be someone from my extended family.

I have childless married friends who have strong relationships with extended family and friends.

I think that might be a consideration for a childless couple - can they/do they want to leave a 'legacy' of time/experience/influence by interacting with the younger generation? It might involve some financial considerations (as in taking the kid(s) to a live theater production or going to the amusement park with the kid(s) or hosting the kid(s) for the weekend while their parent's are away... ) Somebody has to be the Cool Adult(s) in a kids life. :) Or if not the "cool adult" someone who can show the kid(s) that there's more beyond their own family.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by oldfort »

marcopolo wrote: Mon Sep 07, 2020 4:02 pm
oldfort wrote: Sun Sep 06, 2020 10:07 pm
Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare.
I would go with spending less money on housing if you never plan on kids. What's the point in getting a four bedroom house if two of the bedrooms are going to be empty all the time?
There is more to the pricing of a house than its size.
At the margins, maybe. The two biggest factor in housing prices are location and size. You can go with a cheaper location too because you don't have to worry about getting your kids into the best schools.
egrets
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Re: Are there any different financial considerations/rules for a childless couple?

Post by egrets »

000 wrote: Sun Sep 06, 2020 10:09 pm No safety net in old age.
Yes. I'm fortunate to have siblings, but they live states away. If they both pass before me, likely due to our ages, I have no people as a safety net.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by marcopolo »

oldfort wrote: Mon Sep 07, 2020 4:34 pm
marcopolo wrote: Mon Sep 07, 2020 4:02 pm
oldfort wrote: Sun Sep 06, 2020 10:07 pm
Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare.
I would go with spending less money on housing if you never plan on kids. What's the point in getting a four bedroom house if two of the bedrooms are going to be empty all the time?
There is more to the pricing of a house than its size.
At the margins, maybe. The two biggest factor in housing prices are location and size. You can go with a cheaper location too because you don't have to worry about getting your kids into the best schools.

Sure, If your goal is to minimize what you spend on housing.

Others might see the lower expenses and not needing to be in good school district as an opportunity to spend more on other aspects of life (one of which could be choosing to live in a more expensive area) that provides a quality of life better suited for ones needs/wants.

We have kids, but are now empty nesters, so some of the same ideas apply, no longer need to spend as much on them, not tied to schools, peers, etc. We recently spent 3.5x the selling price of our previous home on a new house that is smaller in size.

To the OP, not having kids definitely gives you more flexibility. How you choose to structure your life to take advantage of that is really a personal decision for each person/couple.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by visualguy »

LittleMaggieMae wrote: Mon Sep 07, 2020 4:27 pm As to all the "dire consequences" of a childless couple not having anyone to care for them (or handle their care) in their old age - I would hope that people don't live such lonely empty lives while they were getting to "old age" only interacting with their spouse and a parade of coworkers.

Perhaps since the couple doesn't have children of their own - they might be able to take more time/build relationships/share experiences with extended family and their kids (nieces/nephews). Or perhaps if the childless couple has, oh, I don't, friends who have kids they would get to build relationships/shared experiences with the next generation. As the youngest in the family, a singleton, and childless... I strongly suspect my siblings and their spouses will be dead an gone by the time I need 'old age support/help/decisions made'. I suspect I will be relying on one of the nieces or a nephew in my old age. I took an interest and the time to be "family". I will do whatever I can to make it as easy as possible for who ever I choose to look after my affairs when I can no longer do it. The who ever will most likely be someone from my extended family.

I have childless married friends who have strong relationships with extended family and friends.

I think that might be a consideration for a childless couple - can they/do they want to leave a 'legacy' of time/experience/influence by interacting with the younger generation? It might involve some financial considerations (as in taking the kid(s) to a live theater production or going to the amusement park with the kid(s) or hosting the kid(s) for the weekend while their parent's are away... ) Somebody has to be the Cool Adult(s) in a kids life. :) Or if not the "cool adult" someone who can show the kid(s) that there's more beyond their own family.
Nieces/nephews can help if you have them, and build a strong relationship with them. It's not that easy to be a very meaningful presence in their lives, though, particularly in the US where families tend to be scattered, and you may have lived nowhere near the location where your siblings were raising their children.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Thegame14 »

Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm My wife recently found out that she has a health condition that coupled with her age would make pregnancy extremely risky. We were already on the side of not having children, so this pretty much firmly moved us into being childless.

This did get me to thinking that a lot of "conventional" financial advice - especially for couples our age - usually assume children. That makes sense since the vast majority of people do end up having kids. But I read another thread today about a couple asking whether they can afford to buy a home, and some of the responses suggested keeping the possibility of having children into account (may need a larger home, there will be more fixed costs when children are in the picture). So it did make me think what kind of considerations there may be for couples like us that will never have children. Would especially be interested to hear from folks that may have made it to "retirement age" without ever having children and in hindsight what (if any) conventional rules may have been less applicable to them, or maybe what they wish they might have differently in terms of finances.

Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare. Or conversely, would we need to save even more for retirement than parents because we'll never have children that could help us out if we had a financial calamity? Can we afford to maybe have a bit less in our emergency fund than conventional wisdom? Things like this are on my mind.
I assume you can also budget much less for a house, if it is only 2 people, and no kids, you can keep it to less than 1,000 SQ feet easily, and save a lot of money on a house and property taxes....
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Dottie57 »

000 wrote: Sun Sep 06, 2020 10:09 pm No safety net in old age.
+1

I won’t get any of the help I gave my parents. So I need to choose my housing carefully.

I don’t need to conserve to leave an inheritance either.
Last edited by Dottie57 on Mon Sep 07, 2020 5:35 pm, edited 1 time in total.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by LittleMaggieMae »

visualguy wrote: Mon Sep 07, 2020 4:47 pm

Nieces/nephews can help if you have them, and build a strong relationship with them. It's not that easy to be a very meaningful presence in their lives, though, particularly in the US where families tend to be scattered, and you may have lived nowhere near the location where your siblings were raising their children.
This is true and I agree with you. I was trying to keep in the theme of financial considerations for childless couples.
I suspect that sometimes a childless couple might want to consider the same thing that couples with kids sometimes do - choosing to live closer to "family". And that's often a financial consideration.

I know not everyone has family or might want to distance themselves from toxic relatives - so I would think a "financial consideration" for a childless couple might be building strong connections with people near and dear to them. Relationships take time (and sometimes money to be able to do things of common interest together.) Friends often have kids who require gifts for milestone events or "time" to attend important events. Just like kids shouldn't spend all their time surrounded by other kids - I like to think that adults shouldn't spend all their time surrounded by other adults. :)
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Re: Are there any different financial considerations/rules for a childless couple?

Post by vitaflo »

Lynx310650 wrote: Sun Sep 06, 2020 8:19 pm Would especially be interested to hear from folks that may have made it to "retirement age" without ever having children and in hindsight what (if any) conventional rules may have been less applicable to them, or maybe what they wish they might have differently in terms of finances.

Some of the things I'm thinking of are whether if we do decide to buy a house we might be okay with spending a slightly larger percentage of our income on home expenses since we'll never have to take into account things like daycare. Or conversely, would we need to save even more for retirement than parents because we'll never have children that could help us out if we had a financial calamity? Can we afford to maybe have a bit less in our emergency fund than conventional wisdom? Things like this are on my mind.
We're a few years from having enough money to retire and chose not to have kids. If you take the human/emotional element out of it, you can kind of think of kids as expenses, both current and future (college). But without kids the expenses are much less volatile. There's less of an up and down from birth to adulthood of a child when you're child free, so your expenses tend to even out more.

But financially the same rules kind of apply. You shouldn't spend more on a house than you can afford, you should have enough in your emergency fund to cover an unexpected loss of a job for an extended period of time. Sure, you'll have more money to spend on things without kids, but you still need a budget and you still need to be responsible with the money you do have. Just like you would if you had kids, they're just added to the equation, but the equation is the same.

The real differences are much more in lifestyle/societal than anything. You can choose to go out to eat whenever and wherever you want. You can go on a 2 week vacation in the middle of the school year. You can choose to move to an entirely different area without upending your kids social life.

I will agree with others that some of the spending decisions can be different. You can buy a sports car instead of a minivan. You can buy a smaller house and don't need to care about school district. But these are just things you *can* do, not things you need to. I did buy a sports car, but I also bought a big house in the best school district. Why? It was cheap (bought at the bottom of the housing bust) and the best school district is also the best/safest neighborhood in my city (which makes sense). So just cuz you are able to take advantage of more "child free" things, doesn't mean you have to. It's a choice, you just have some different ones without kids.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Jack FFR1846 »

Without kids, you likely don't decide that one of you will stay home and not work outside the house. We did that. I calculated based on DW's salary when she left till she went back. That cost us $1.5M. College for my older one was only $300k.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by oldfort »

fourwheelcycle wrote: Mon Sep 07, 2020 6:57 am OP's question raises a related question - do people, BH's as a group or any people, manage their finances according to rules of thumb or according to their own inclinations?

When I became familiar with this forum I was surprised by the number of posts that ask "Can we afford this big home?" or "Can we afford this expensive car?" I was struck that, based on their own inclinations, the posters seemed inclined spend as much as BH rules of thumb or best financial practices would allow. In contrast, my wife and I have always been inclined to spend as much we feel we need to for what we consider a modest lifestyle, and save whatever money is leftover. BHs call this a rule of thumb as well, labeling it as LBYM. We never consciously aimed for LBYM, we just spent the way we had seen our parents spend.
In a lot of cases, it seems posters simply want validation for decisions they've already made. Along these lines, it seems bizarre to me people will rely on so-called rules to determine how much to spend on housing. The banks will have formulas on the largest mortgage you can get. Below the upper bound, people should make a budget to see what's affordable for them and create their own value judgements on spending priorities.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by GreenLawn »

Retired with no kids. Based on anecdotal evidence from my peers, I saved lots of money and had much more freedom.

For those folks who mention having children as old age insurance, isn't long term care insurance much cheaper than raising kids? I'd be curious what percentage of older parents needing long term care actually receive support from their adult children? I'd hope it would be 90+%, but anecdotal evidence is welcome.

The two instances that I know of personally where old folks needed long term care, they paid for both kids and long term care insurance. Seems they could have cut out one of those. They ended up spending hundreds of thousands of dollars between the two. Now that is a very expensive insurance policy!
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Re: Are there any different financial considerations/rules for a childless couple?

Post by fyre4ce »

These are all the *financial* impacts I can think of. There are social/lifestyle impacts that aren't captured:

Career/Income

Not having children gives you a lot more flexibility in your career, for example, working extra hours on nights and weekends, working odd shifts, traveling a lot. Children can motivate one parent to quit their job entirely, and/or one or both parents working reduced hours, to spend more time at home and help with the increased workload around the house. Without kids, you can take a job in a new city on short notice without having to worry about the impact to kids' school schedules or social lives. Due to the lower expenses, it's easier to go back to school and get more training if you want to advance your current career or switch to a new one.

Some careers have conflict with having children. Certain medical training programs can last well into a person's 30's, which eliminates most of a woman's childbearing years. For some, this would preclude those career paths entirely, or motivate egg freezing.

Housing

Housing needs are much less without children. You don't need extra bedrooms, extra rooms for play areas, storage for toys, etc, and you can ignore school district, all of which mean you can make do with much less expensive housing. In my area, a basic 3 bdr house in a 6/10 school district is $1M, and a basic 4 bdr house in a 9/10 school district is $2.0M. If you want to have three children and them to each have their own room, in a good school district, the absolute cheapest you can find is $3M. (Of course, if the other factors mean you have much more disposable cash, then you can choose to buy a more expensive house than you otherwise would, but it's not a need.)

Some people choose their location to be close to family willing to help with childcare. Without this constraint, you have more flexibility on where to live. (Although it's probably more common for the parents to want to live in a HCOL area and the grandparents in a LCOL area, than the other way around.)

Spending

Kids raise spending in many areas. Food, clothes, toys, diapers, electronics, supplies, activities, medical expenses, utilities, etc. Travel is more expensive, once they're older than 2-3 years - they each need their ticket for air travel and other forms of transportation, you probably need more or bigger hotel rooms, more tickets to events/attractions, etc.

Where applicable, fertility treatment, IVF, and/or adoption can be extremely expensive.

Childcare is often a huge expense. In my area, daycares run about $3,000 per month per child. A full-time nanny costs about $40-50,000 per year, although they can care for multiple children.

Once you reach 2-3 kids, you probably need a larger/more expensive vehicle.

Education is another huge expense. I haven't looked at private school tuition lately but I'm pretty sure it's well over $250,000 per child for tuition, room, and board for a 4-year undergraduate program. Private K-12 tuition is about $40-50,000 per year per child, if you so choose, or weren't able to afford a house in a satisfactory school district.

Even adult children can still be a big expense - for example, paying for a wedding, down payment on a first house, etc.

Taxes

Under current tax law, the federal government offers a tax credit of $2,000 per child, which phases out above an AGI of $400,000 for a married couple. This is a rare case where kids have a positive financial impact, although it doesn't come close to offsetting the other impacts.

Insurance

Health insurance can be just the for policyholder plus a spouse, which will be less expensive than for a family with children.

Life and disability policies can be smaller. If both childless spouses work (which is probably more common than with families with children) then life and disability insurance may not be needed at all.

Liability premiums may be lower without children, especially compared to families with teenage drivers.

Long-term care insurance may be needed *more* without children who would be willing and able to contribute financially to your care late in life.

Saving/Investments

Without children, a retired childless couple can afford to spend at a higher rate, and don't have to worry about leaving an inheritance. Along the same lines, this removes one major drawback to a SPIA.

Due to lower expenses, emergency funds can be smaller without children, with the associated decrease in cash drag.

Depending on the children, they may be able to provide some financial insurance against running out of money late in life, or other financial hardships. Long-term care insurance is probably cheaper, however.

Asset Protection

No children (especially no teenage drivers) removes a major liability risk.

Estate Planning

Estate planning can be simpler, and probably less expensive. Trusts may not be needed where they would otherwise.

---break---

That's all I can think of for now. Suffice to say that children are an enormous expense that can dominate one's financial life.
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warner25
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Re: Are there any different financial considerations/rules for a childless couple?

Post by warner25 »

fyre4ce wrote: Mon Sep 07, 2020 8:31 pm Suffice to say that children are an enormous expense that can dominate one's financial life.
Yes, good post. I'm tempted to say that a couple has nearly "won the game" by choosing to be DINK (dual-income, no kids). Of course I'm sorry to see, in the OPs case, that this was not necessarily a "choice." I don't believe that there is any logical, rational reason to have kids - it is purely an emotional decision - but "feelings" are what ultimately matter.
Jack FFR1846 wrote: Mon Sep 07, 2020 6:05 pmWithout kids, you likely don't decide that one of you will stay home and not work outside the house... That cost us $1.5M...
I'm sure that our cost will be at least that much. It's staggering, and I think that type of money would go a long way towards solving some of these end-of-life issues that people without children worry about.
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changingtimes
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Re: Are there any different financial considerations/rules for a childless couple?

Post by changingtimes »

To weigh in on the estate planning part of the discussion.

When my mother died, DH and I got all of our estate ducks in a row, which also brought about long discussions about philosophies of who in the extended family to leave money to, or not. Then DH was diagnosed with cancer less than a year later, and died within a year of that.

Since we already had an estate attorney and since we had already created our trusts, not only was it easier for me in terms of handling his estate, but it also meant that I had a comfort level with the attorney and with the structure we had set up. I can't recommend this enough. It's hard enough when one is left behind (especially without children to lean on during such an insanely stressful time), so it's a real gift to the survivor to have gone through the process together. And the attorney then helped me structure my revised trust to make sure that my trustee can get money quickly to handle my care in case I become incapacitated. And also helped me to assign new health care POAs (see below), etc.

As for the "what about nieces and nephews and friends?" portion of the "no safety net" discussion, of course one HOPES that there are people out there who will decide to pitch in and take care of you, but there is rarely that same level of connection that there would be with children. I do have one sibling that will probably do the minimum, ie, making sure I get into a nursing home or whatever, but we aren't that close.

I think people without kids are generally pretty darn independent, and the notion of having to eventually depend on the kindness of others is just not how a lot of us roll. DH and I certainly didn't. It would be great, but I'm not planning my future based on "it would be great."

One other thing on the childless couples/friends/etc. My closest friends, as it turns out, are all childless. There is a sense of camaraderie especially among childless females that I think will mean a lot going forward. In fact, two of them hold my health care POA.

As for the poster with the three houses (edit: Wricha), I've actually been reading past vacation home threads and have seen your posts. I am considering buying a second home that is nowhere near my current home, but I love both places equally and, well, I have the money. I wish DH and I could be doing it together, but it's actually an idea we had discussed. (I'm going to wait to see if the housing bubble bursts a bit first, though.)

Sorry, this is disjointed. Was away all day and missed out on all the good thread stuff. :-)
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Luckywon »

visualguy wrote: Mon Sep 07, 2020 3:44 pm
1210sda wrote: Mon Sep 07, 2020 2:56 pm This is a very good post/thread.

I agree that some (many?) overestimate what their kids will do for them in their old age.

Yet, in spite of that, we still worry about their college, their first house, their inheritance.

Sometimes I wonder if those who are childless are better off. At least you know what to expect or not expect. Those with offspring may think they know what to expect, but as other posters have stated, you may be surprised.
Those who are childless are in a very extreme situation in old age. It is nothing like the situation with children unless the children are completely alienated from their parents, which is very rare. Children who don't want to become their parents' caregivers are fairly common, but children who won't help with managing and monitoring their parents' care and finance are rare. Beyond the emotional bond, there's also a financial incentive typically (inheritance-related) for children to put it in this effort.
Agree 100%. It would be a rare circumstance where someone other than a child could be expected to fulfill this role in the same way a child usually will. As someone childless, it's really very depressing to consider these scenarios.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Rob1 »

No kids. Retired early, although we’ve both continued to do a bit of work. The many excellent posts have already shared pretty much all of my thoughts. But I’ll add:

To the extent that not having kids results in early retirement, then I think there are some key differences (not sure I’d called these differences changes to the typical “rules”). For example, one has to plan on how to fund the years before access to things like tax deferred accounts, Medicare, and Social Security.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by fourwheelcycle »

changingtimes wrote: Mon Sep 07, 2020 9:26 pm .... As for the "what about nieces and nephews and friends?" portion of the "no safety net" discussion, of course one HOPES that there are people out there who will decide to pitch in and take care of you, but there is rarely that same level of connection that there would be with children....
When she was about 79 my never-married aunt, a career secretary at a large bank, asked me if I would be willing to serve as her DPOA and executor. I said yes without hesitation, although I was only 49 at the time and knew nothing about estate planning or POA/executor duties. As it turned out, my aunt had gone to a Harvard attorney high school friend who understood her circumstances and set her up with a revocable trust, a simple will, and the necessary DPOA documents.

She lived independently until 89, when a series of falls resulted in two short hospital admissions and a longer admission to an acute rehab facility. I stepped in to take over all of her finances and health care. Step one was to move her from Boston to an excellent NFP skilled nursing and rehab facility with an associated assisted living facility near my home in rural New England. Step two, when she was able, was to go into our local BoA branch and change the owner of her checking and savings account from her to her trust, with her name and mine listed on the checks as co-trustees. Next I opened a Vanguard account in the name of the trust, with myself as the only active log-in. Step three was to contact SSA, Medicare, each of her health care providers, etc., and have her mailing address changed to my home address. I filed her federal and state taxes, and ultimately her final tax submissions, from my address, signing as her DPOA.

My wife and I visited her regularly at her very home-like, twelve-resident assisted living facility about a half-hour from our home. She was quite happy, and could go to meals and out for short walks with her walker. When she died several years later there was no probate because her savings were already in her revocable trust. I payed her final expenses and distributed her remaining funds in equal shares to her surviving siblings and the two daughters of one deceased sibling.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by stan1 »

As usual some crazy comments when finance touches on social and family issues.

First, if this is recent news, let it sink in for a bit. You and your wife may decide you want to adopt a child or maybe you'll seek other medical opinions with a different recommendation. There are choices and maybe additional options.

If it does turn out that you don't have children of your own perhaps you have nephews and nieces who will become like children to you. Maybe you take a more active role in their lives and build closer relationships with your siblings. Or cousins.

As you age you may rely on a network of close friends or neighbors. Many people are quite willing to help a friend in need.

I would not spend time worrying about things that might happen 50 years from now. There will be many changes you have no control over.
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Re: Are there any different financial considerations/rules for a childless couple?

Post by Sandtrap »

No legacy issues?

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Re: Are there any different financial considerations/rules for a childless couple?

Post by LittleMaggieMae »

I find the "childless couples" spend less on housing to be a bit subjective. I know 3 childless couples and they all have nice 3 and 4 bedroom suburban houses (1 master bedroom/bath, a nicely set up home office bedroom, sometimes a 2nd home office room, and then an excercise/TV/futon sparebed room... The basement may house their hobbies.

Other high income childless singletons and another of the childless couple I know opted for expensive downtown condo living. It's harder for childless singletons to "compete income wise" with double income childless couples. especially if the double incomes are both well above median income.

I'm childless and single. I can't afford the same kind of housing the 2 higher earning double incomes WITH kids can afford, much less the DINK white collar professionals. I'm earning 1/2 or less their income and I don't get any of the tax perks of being married or having kids. :)

I don't think any of the people I know chose their housing SOLELY based on if the cost was 3X or less than their income. I'm pretty sure they chose their house based on location (proximity to the things they do for fun/family/work), what kind of lifestyle they want to lead (what they do when they are not at work), and how the cost of that housing impacts what they want to do when they are not at work.
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