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Financial Impact of Not Having Children

February 04, 2019 · 5 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Financial Impact of Not Having Children

If you have kids, it’s a good thing you don’t have to come up with this money up front (although it would probably help). A child costs over $245,000 for a middle-income family to raise until age 17, according to the U.S. Department of Agriculture.

If you don’t have kids, you’re part of an increasingly large group. The number of childless Americans has been steadily increasing for decades; according to the most recent census , “The share of adults living without children has climbed 19 points since 1967 to 71.3%.”

Increasingly common living situations have also made it more difficult for younger people to start families, even if they wanted to. In 2016, the number of millennials age 25 to 35 who moved back in with their parents rose to 15%, up from 12% in 2010.

If you’re part of a couple who have decided not to have children, you may be referred to in the culture as “DINKs” (dual income/no kids). DINKs are perceived to have more time to focus on personal development (and each other) and to be able to follow their passions.

However, having no children is no guarantee of being in the green, especially when it comes to retirement savings. DINKs may not have the financial burden of raising children, but that may leave them tempted to splurge on a more lavish lifestyle.

It’s also a little-known fact that many seniors are working long beyond the typical retirement age of 65. In 2016, nearly 19% of senior citizens hadn’t retired and two-thirds were working full-time (when the person has a white collar job, the situation is more likely to be voluntary).

Here are a few proactive steps to take to help keep yourself from becoming a statistic.

Saving for Retirement is Job #1

Having no children may mean that you have less to be responsible for, but don’t forget to be responsible for yourself. One way to take care of your future self now is to save for your retirement.

Determine what income you will receive in your retirement; that includes Social Security and any annuities or pensions coming your way. Subtract that from the annual living expenses you expect to have.

If you work at a full-time job, your employer may offer a 401(k) as a benefit. This is a retirement plan and employers often match any contributions you make to the fund.

It usually allows for higher contribution rates than other investment funds (in 2019, you’ll be able to contribute $19,000), and your contribution is simply deducted from your paycheck. You fund your 401(k) with pre-tax dollars, which reduces the amount of taxable income you report to the IRS each year.

If you don’t have an employer-sponsored 401(k) at work (and even if you do), consider an Individual Retirement Account (IRA). An IRA is another tax advantaged fund that allows you to invest your money over time.

If certain conditions are met, taxes can be deferred until retirement, when your tax bracket likely will be lower. Money invested into an IRA might be invested in stocks, bonds, ETFs, and mutual funds.

You’re not able to cash in any of this investment until you turn 59 ½ (happy half-birthday in advance!). If you do, you have to pay a 10% penalty, which could take a big chunk out of the money you’ve worked hard to invest.

A Roth IRA is another tax advantaged option. Qualified individuals are allowed to contribute after tax income, but earnings are not taxed when you make withdrawals after age 59 ½, when certain conditions are met.

Estate Planning

This is all about tying up the loose ends after you die, making sure that the money you leave behind goes to a spouse, relative, friend, or even a charity. What’s important is that your final wishes are carried out, legally.

Most of your final wishes can be executed through a will. It’s never too early to write one, and it typically only costs a few hundred dollars to make it happen.

If you don’t have a will, that means you will die “intestate,” and your money and property might be given away for you by a judge. A will lets you appoint an executor and empowers him or her to carry out your decisions.

The executor might sell your property, make sure your final taxes are paid, and wrap up any unresolved financial issues you’ve left behind. The job of an executor carries a lot of responsibility and can also involve court time and people contesting your will. Make sure your executor is somebody you trust, and who is working in your best interests.

A will also lets you decide who gets your money and property after you’re gone (your beneficiaries). In most cases, your investments—for instance an IRA, 401(k), and life insurance—allow you to list beneficiaries as well.

Assume You May Need Elder Care

Without children, there may be fewer people around to take care of you when you’re older. That may mean planning for residence in an elder care or assisted living facility. And that includes the cost of living there, and it’s usually rather costly.

“A lot of people have this sense that it’s all going to work out (but) have never gone through the exercise of really understanding what the numbers look like,” Sally Brandon of Rebalance IRA told USA Today.

Surprisingly, only about 3% of senior citizens live in nursing homes, according to the last U.S. Census in 2010. Rather than move to a nursing home or assisted living, many seniors choose in-home care support. Hopefully you can too, but better safe (and prepared) than sorry.

Plan for the Death of a Spouse

This may be an unpleasant thing to even think about, but planning for your worst-case-scenario is a must for your future financial planning. First, you’ll want to consider solid life insurance policies. In addition to life, you may wish to consider medical and disability insurance as well, in the event that your spouse becomes ill, injured, or disabled.

Life insurance can provide your family with financial help in the event of your passing, while medical insurance can help if you are no longer able to contribute financially to your family because of a disability or injury.

Plan for Your Pets

Find an animal lover, or a lover of your particular pet, to take care of them after you’re gone. The idea is to make the transition as easy and as non-traumatic as possible for your pet, and to avoid the last resort of an animal shelter.

Naming a caretaker in your will may not necessarily obligate that person to take care of your pet. You may want to make a written agreement with the caretaker, and start a small trust for the care and feeding of your pet.

Saving For Retirement

Ready to start saving for retirement? You can open up an investment account with SoFi Invest. Or if you have an old 401(k) or IRA accounts you can roll them over into a SoFi Invest account. There are no management fees and all SoFi members have access to speak one-on-one with a SoFi financial planner.

They can help you map out a definite and clear financial plan. With SoFi Invest, you can get the navigation assistance you’ll need to stick with your financial goals.

Learn more about SoFi Invest today!


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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

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