Retirement Benefits

No Kids? How Being Childfree Impacts Retirement Planning

Happy young couple looking away while holding hands at rooftop. Smiling woman is spending leisure time with boyfriend. They are enjoying at building terrace.

More Americans are choosing to be childfree, meaning they have chosen not to have children—biological, adopted, or step. Being childfree is not the same as being an adult without children—someone who is planning on having children in the future or would like to have children but may be unable to.

It’s difficult to quantify how many people are currently childfree, but a recent study estimates that 1 in 5 Americans have opted out of parenthood. Pew Research found that 44% of people under 50 who don’t have children now don’t expect to have children in the future, an increase since the COVID-19 pandemic.

So, how does being childfree change your financial and retirement planning? Here are a few points to consider.

What are you spending or saving for?

Without childcare expenses or college savings, childfree people may in general have more funds at their disposal. Depending on their priorities, childfree adults can spend their extra cash on travel, charities, hobbies, and building up a sizeable retirement savings.

Start by examining your lifestyle and priorities to determine how to allocate your money. Make a list of goals and develop a budget. It’s important when budgeting to plan for the unexpected—good and bad. Automatically placing your money in different buckets, such as “travel,” “emergency fund,” and “donations” can help you reach your savings goals.

It’s always a good idea to pay yourself first, meaning setting aside money for your future retirement. Your CalPERS pension and Social Security, if available to you, are a good place to start, but it’s also wise to establish a deferred compensation plan such as a 401(k) or IRA. As a CalPERS member, a variety of plans are available to you.

Do you have an aging plan?

Being partnered or having children is no guarantee that someone will care for you as you age. Especially if you’re childfree, consider and plan how you want your life to look as you approach your golden years.

  • Do you want to age in place? Think about how you might need to modify your living space as you age. Determine how close you live to a grocery store and pharmacy. Would you be able to walk there, rely on friends or family for a ride, or use public transportation? If you’re a distance away, you might want to move somewhere you can be closer to these and other amenities.
  • Do you want to maintain your independence yet have a safety net? Consider buying a home in a 55+ community that offers tiers of nursing care as you age. Affinity retirement communities also offer the benefits of companionship and events to fill your social calendar. Depending on the services offered, pricing can be steep, so you may need to save up while you’re still working.
  • Do you plan on entering a residence home or needing long-term care? The U.S. Department of Health and Human Services estimates that close to 70% of today’s 65-year-olds will require long-term care for an average of three years. Some retirees may be able to rely on friends or family for help, but others most likely will cover those costs out of pocket. To estimate the costs of different levels of long-term care in your area, use Genworth’s Cost of Care calculator.

What else is there to consider?

  • Designate a CalPERS special power of attorney to conduct important CalPERS business for you, should you become unable to do so yourself.
  • You might also consider creating a health care directive to outline the type of medical treatment you do or do not want.
  • A health care proxy or medical power of attorney is a document that names a trusted person appointed by you to act on your behalf should you encounter a medical emergency. They should be familiar with your wishes and comfortable carrying them out.
  • As you approach your later years, plan for your assets and estate. Take an inventory of everything you possess, from your car to your bank accounts. Include your digital assets as well, like social media accounts, online shopping accounts, and websites. Also consider your pets! Prepare an estate plan either online or with an estate attorney and name someone you trust as the executor.
  • Being childfree means you might not want to have an excess of money remaining upon your death unless you plan to give it to loved ones or donate to a charity. By working with a financial advisor, you can determine how much money you want to preserve and how much you want to spend.

If you’re childfree you’ve already flipped the script on traditional life goals and milestones, so consider what else you want to experience and achieve. What will bring you fulfillment? A strong financial foundation will support your life choices.