As the child-free lifestyle becomes more popular among younger generations, many people believe that this means they will have to spend a lot more money, but that is not always the case.
Published yesterday at 6:55 p.m.
Nina Dragicevic The Canadian Press
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 continue the downward trend in the number of children per woman in the country. About a third of 15 to 49 year olds do not plan to have children.
Financial planning is actually an “underserved group,” says Barbara Knoblach.
Knoblach, an Edmonton-based financial planner who works with Money Coaches Canada, says many advisory firms like to recruit multiple family members across generations, which is the main reason this clientele isn't considered a priority.
Traditional financial planning focuses on the concept of building generational wealth. However, this is of little importance for customers without children.
Barbara Knoblach, financial planner
Ms. Knoblach notes that among her clientele without children, the focus is on saving and investing and the average net worth is higher.
Occupational disability and life insurance
For a single person, disability insurance is important to protect themselves from a prolonged illness or serious injury and a resulting long absence from work because they cannot count on their spouse or adult children to care for them or them support, she emphasizes.
However, this increasing importance of occupational disability insurance leads to a reduction in the importance of life insurance.
“Conversely, people without children generally do not have to take out any significant life insurance,” adds Knoblach, “because they have no survivors.” »
Even in retirement, those without children need a larger financial cushion that they can fall back on – they have to finance their care themselves as they get older, as it is not possible to move in with a child.
You will also need to appoint a representative or executor, an especially important detail when 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 adviser at Macdonald. Shymko & Company, Vancouver.
“Whether it’s increasing savings or increasing consumption [le fait de ne pas avoir d’enfant] allows for greater flexibility as long as retirement goals are 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, Black notes that clients who don't have children often donate their assets to charity after they die, sometimes leaving some money to other family members, such as nieces and nephews.
Modern families and the wealth transfers within them are no longer entirely “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 is constantly evolving,” says Ms. Petrera.
Couples who don't have children can still incur child-related costs, Petrera points out, as some people don't end up in this situation voluntarily.
“You can actually spend a lot of money to have children,” she said. From a financial planning perspective, we cannot therefore assume that not all childless couples have expenses related to children or the desire to have children. That's why we help them create a budget and plan these expenses. »
Individuals and couples without children may also face different expectations within their extended family. They can be expected to care more about their aging parents than their siblings who have children of their own.
Knoblach says she has seen clients without children who have to foot the bill for elderly parents.
“Although it is true that childless clients do not have to pay for the costs of raising children, they do have to expect other costs, including their own care later in life,” explains Ms. Knoblach.
“It is not a given that someone without children is better off than someone who has raised children. “Those who don’t have children have to save disproportionately in order not to run the risk of outliving their money,” she adds.
Although lifelong forgoing children saves the high cost of raising children—Statistics Canada estimates raising a child to age 17 at $366,000—the fact remains that long-term planning requires caution and expertise .
“As more people choose not to have children, I hope that financial planners will be better prepared to address the unique needs and challenges of this client group,” concludes Ms. Knoblach.