As the child-free lifestyle grows in popularity among younger generations, many 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 do not plan to have children.
When it comes to financial planning, this is actually an “underserved group,” says Barbara Knoblach.
Financial planner based in Edmonton and working with Money Coaches Canada, Mme Knoblach says many consulting firms like to recruit multiple family members across generations, which is the main reason this clientele is not considered a priority.
“Traditional financial planning focuses on the concept of building generational wealth,” she explains. However, this is of little importance to customers who do not have children. »
Among his clientele without children, Mme Knoblach notes that there is an emphasis on saving and investing, and the average net worth is higher.
Disability and life insurance
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 take out significant life insurance,” adds Ms.me Knoblach, because they have no dependents. »
Likewise, in retirement, people without children need a larger financial cushion to fall back on — they need to fund their own care as they age, she explains, since there is no It is not possible to move in with a child.
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 bear the costs of raising children, says Ian Black, independent financial advisor at Macdonald Shymko & Company, Vancouver.
“Whether it is an increase in savings or consumption [le fait de ne pas avoir d’enfant] allows greater flexibility, provided the retirement objective is taken into account, says Mr. Black. Some people want to retire at 52. Others can’t imagine what they would do when they retire. »
“Family circle”
When it comes to leaving a legacy, Mr. 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,” argues Mme Petrera.
Couples who don’t have children may still have costs associated with children, Mr. Petrera points out, since some people are not in this situation by choice.
“They can actually spend a lot of money trying to have children,” she said. 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. »
Individuals and couples without children may also face different expectations within their extended family. They might be expected to care for their aging parents more than their siblings who have children of their own.
Mme Knoblach says she’s seen clients without children have 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 Mme 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 prudence and expertise must be exercised when it comes to long-term planning.
“As more and more people decide not to have children, I hope that financial planners will be better equipped to meet the unique needs and challenges of this client group,” concludes M.me Knoblach.