As the child-free lifestyle surges in popularity among younger generations, many might imagine it means having a lot more money to spend, but that's not always the case.
In fact, it鈥檚 not a prioritized clientele in the financial planning world, some experts say 鈥 and it鈥檚 one with its own unique needs.
According to Statistics Canada, gen Z and millennial generations are continuing the downward trend of the number of children per woman in Canada. Roughly a third of people aged 15 to 49 do not intend to have kids at all.
When it comes to financial planning, this is actually 鈥渁n underserved group,鈥 says Barbara Knoblach.
A financial planner based in Edmonton and working with Money Coaches Canada, Knoblach says many advisory firms like to sign on multiple members of the same family, across generations 鈥 which is the main reason this clientele is not prioritized.
鈥淭raditional financial planning is centered on the concept of building generational wealth,鈥 she says. 鈥淗owever, this is of little significance for child-free clients.鈥
Among her clientele without kids, Knoblach sees an emphasis on saving and investing, and a larger average net worth.
For a single person, disability insurance is important to protect against a prolonged illness or serious injury and subsequent long absence from work since they can鈥檛 rely on a spouse or adultchildren for care or support, she points out.
With this increased importance on disability insurance, however, there is less emphasis on life insurance.
鈥淐onversely, child-free individuals do not tend to need a lot of life insurance,鈥 Knoblach adds, 鈥渁s they do not have dependents.鈥
Similarly, upon retirement, child-free people need a bigger financial cushion to land on 鈥 they have to finance their own care as they age, she explains, since moving in with a child is not an option.
They also need to identify someone as their power of attorney or executor, a particularly important detail if there鈥檚 no spouse, and if other relatives live far away.
However,people without kids have more flexibility in their financial goals and retirement plansbecause they skip the expense of raising children, says Ian Black, a fee-only financial advisor with Macdonald Shymko & Company in Vancouver.
鈥淲hether it鈥檚 increased savings, or increased consumption, [being child-free] allows for more flexibility as long as you鈥檙e taking into account your retirement goal,鈥 Black says. 鈥淎nd everyone鈥檚 different with that, you know, some people want to retire at 52. And some people can鈥檛 think of what they would do after they retire.鈥
In terms of leaving a legacy, Black sees child-free clients often donating their wealth to charity after their deaths, and sometimes leaving some money for other family members such as nieces and nephews.
Modern families, and wealth transfers within them, aren鈥檛 quite 鈥渓inear鈥 anymore, says Julie Petrera, senior strategist of client needs in Canada at Edward Jones.
Instead of a family tree, financial planning firms are seeing something closer to a 鈥渇amily circle.鈥
鈥淭he definition of family continues to evolve,鈥 Petrera says.
Child-free couples might still have costs associated with children, Petrera points out 鈥 some people are not child-free by choice.
鈥淭hey may actually spend a significant amount of money trying to have children,鈥 she says. 鈥淪o from a financial planning perspective, we can鈥檛 assume that all child-free couples have no expenses related to children, or trying to have children. So that鈥檚 something we would help them budget for and plan for.鈥
Individuals and couples without kids may also face different expectations within their extended families. This segment could be expected to care for aging parents, more so than their siblings who have their own children.
Knoblach says she鈥檚 seen child-free clients expected to pick up the bill for elderly parents 鈥 and she tells them to communicate clearly with siblings.
鈥淎lthough it is true that child-free clients do not have expenses for raising children, they will be facing other expenses, such as for their own care later in life,鈥 Knoblach says.
鈥淚t is not a given that a child-free person will be better off than someone who has raised children. Child-free individuals need to save over-proportionally to avoid the risk of outliving their money.鈥
While remaining child-free throughout life may saveon the steep costs of having children 鈥 Statistics Canada quotes $366,000 to raise one child to 17 years old 鈥 it still requires care and expertise in planning for the long-term.
鈥淎s more and more people decide not to have children,鈥 Knoblach says, 鈥淚 hope that financial planners will become better equipped to address the unique needs and challenges of this group of clients.鈥
This report by 香港六合彩挂牌资料 was first published Dec. 26, 2023.
