The Retirement Vision for Clients Without Children

While there is no official count of U.S. adults without children, data show this part of the population is growing. A 2023 study in Michigan found 21.3% of respondents were “childfree” (never wanted children) and 5.6% were “childless” (wanted children but did not have them). That same year, Pew Research found that nearly half of respondents younger than 50 who did not have children said it was unlikely they would ever have children, up from 37% in 2018.

Financial advising may not always properly consider the needs of single and married adults without children, according to Jay Zigmont, who focuses on such clients at his registered investment adviser, Childfree Wealth, and his estate planning company, Childfree Trust.

From software that assumes clients have spouses and children, to difficulties designating next of kin and financial and medical powers of attorney, Zigmont sees an inherent bias against people who do not opt for nuclear families.

The following interview is edited for length.

PLANADVISER: What issues should financial advisers be aware of regarding clients without children?

Jay Zigmont

Jay Zigmont: [NBC News] did a great poll with Gen Z and asked, “What’s your priority in life?” For women, having kids was No. 10. For men, it was No. 8. And that was after financial independence, a whole bunch of other things.

So how do [financial] professionals understand this audience? At Childfree Wealth, we find that 80% of our clients have never worked with a financial planner. We’re talking about an ocean of people who need to be served, but you need to learn how to do it. Things like life insurance for somebody single [with] no kids—very little value. But long-term care and disability insurance does change their retirement plan.

PLANADVISER: In what other ways do retirement plans differ for your clients?

Zigmont: I always think about this starting at the end of your life and working your way backwards. Child-free people—probably 95% of the folks I’ve worked with or more—don’t care how much money they pass on to the next generation. The way I say it: My nephews get what’s left over. If they get $10,000 or $100,000, that’s fine. If they get $1 million, I made a mistake, because I probably should have helped them earlier in their life, rather than when I’m 90 and they’re 60.

You have to start talking about spending instead of saving. It changes things like assumptions around step-up in basis after you die, whether or not you should own real estate, life insurance.

Then, as we keep going, if you say you’re child-free, the No. 1 question you’re going to get is, “Who’s going to take care of you when you’re older?” You’ve got to have a plan for long-term care, ideally in place by [your] mid-40s. That includes who pays for it, how are you going to pay for it—long-term care insurance or whatever—and who makes decisions for you when you can’t [make them].

Being child-free doesn’t automatically make you rich, but it does give you some time, money and freedom to do what you enjoy. So your financial plans can’t be static.

The way we do it with our clients, we build what we call a “die with zero” safety net, which means we have a plan for long-term care. We put off Social Security until 70, and then we have a couple of years’ cash invested.

Then … we optimize for a 50% success in a Monte Carlo simulation [to predict success of the client spending down all money]—which, by the way, freaks most planners out—because when you do a simulation on Monte Carlo, a 95% success means there’s actually a 95% chance of failure for a child-free person of hitting their goals. If you’re trying to die with zero, it doesn’t go there. We’ll set up a plan and say, “All right, let’s figure out how much you have to spend or give or use … to get to a 50% Monte Carlo success.

PLANADVISER: Underspending is an ongoing concern with retirees. What advice do you give clients without children about spending later in life?

Zigmont: Child-free people give to charities at about three times the rate of parents—they tend to be charitably minded. So we tend to work on both spending and giving money. I have a client with more than $10 million. They’re in their 70s, and we’ve set a goal that every year, they spend $150,000 on travel and they give away $150,000. If you’re charitably minded, you’re better off giving that during your life, because you see the impact and get the tax benefits.