As the child-free lifestyle grows in popularity among younger generations, many people imagine that it means having a lot more money to spend, but that’s not always the case.
In fact, some experts say that this clientele is not a priority in the world of financial planning and that they have their own needs.
According to Statistics Canada, Generation Z and millennials are continuing the downward trend in the number of children per woman in the country. About a third of people aged 15 to 49 don’t plan to have children.
When it comes to financial planning, this is actually an “underserved group,” says Barbara Knoblach.
An Edmonton-based financial planner with Money Coaches Canada, Knoblach says many advisory firms like to recruit multiple family members across generations, which is the main reason this clientele isn’t considered. as priority.
Among her clientele without children, Knoblach finds that there is an emphasis on saving and investing, and that the average net worth is higher.
For a single person, disability insurance is important to protect themselves against a prolonged illness or serious injury and a long absence from work that would ensue, because they cannot count on a spouse or children adults to take care of her or support her, she emphasizes.
This increased importance given to disability insurance, however, results in a reduction in the importance given to life insurance.
“Conversely, people who don’t have children generally don’t need to purchase significant life insurance,” Knoblach adds, “because they don’t have dependents. »
They must also appoint a proxy or executor, a particularly important detail if there is no spouse and other family members live far away.
However, people without children have greater flexibility in their financial goals and retirement plans because they do not have to cover the costs of raising children, says Ian Black, independent financial advisor at Macdonald. Shymko
“Whether it is an increase in savings or consumption [the fact of not having children] allows greater flexibility, provided that the retirement objective is taken into account,” says M .Black. Some people want to retire at 52. Others can’t imagine what they would do once they retire. »
When it comes to leaving a legacy, Black finds that clients who don’t have children often donate their assets to charity after they die, and sometimes leave some money to others family members, such as nieces and nephews.
Modern families, and wealth transfers within them, are no longer quite “linear,” says Julie Petrera, senior client needs strategist in Canada at Edward Jones.
Instead of a family tree, financial planning firms instead see a “family circle.”
“The definition of family continues to evolve,” Petrera argues.
Couples who don’t have children may still have costs associated with children, Petrera points out, since some people aren’t in this situation by choice.
“They can actually spend a lot of money trying to have children,” she says. From a financial planning perspective, therefore, we cannot assume that all childless couples do not have expenses related to children or trying to have children. So we will help them establish a budget and plan for these expenses. »
Knoblach says she has seen clients without children having to foot the bill for elderly parents.
“While it is true that childless clients do not have to support child-rearing expenses, they will face other expenses, including for their own care later in life,” explains Ms. Knoblach.
“It is not a given that a person without children will be better off than someone who has raised children. People who don’t have children have to save disproportionately to avoid the risk of outliving their money,” she adds.
If not having children throughout one’s life saves on the high costs of raising children – Statistics Canada cites $366,000 to raise a child to age 17 years – the fact remains that caution and expertise are required when it comes to long-term planning.
“As more people decide not to have children, I hope financial planners will be better equipped to meet the unique needs and challenges of this client group,” concludes Knoblach.
