How to Make a Retirement Plan When You Don’t Have Kids

I don’t want to have kids. So I hear often: who’s going to take care of you when you get old? And while I don’t love that question, it’s an important one to ask yourself. Today we’re going to talk about how you can set up a financial plan now and later in life to make sure that you have a plan for care.

First, let’s be clear that kids are not a retirement plan in general, and having kids just so that you have someone to take care of you later in life is a really bad idea. It’s also absolutely no guarantee of care. Taking care of aging parents is expensive, time consuming and can be emotionally draining. Especially here in the United States where there is a home health care worker shortage and aging is really expensive because of our messed up health care. Even with rapid growth, home care agencies can’t meet demand. More than 85% of the home care agencies in the 2022 HCP benchmarking report turned down cases in 2021 due to the shortage, and 59.7% consistently turned down clients. Plus, financially speaking, the cost of aging can be astronomical. I recently spent time with my grandmother near the end of her life, and we were quoted $5,700 per week to have a live in 24 hour nurse. $5,700 per week! That’s not per month, that is per week.

As more and more adults remain child-free, the question really does become what is the plan? Who will be there to make healthcare decisions for you or to act as your legal representative if you are incapable? And I do think these questions and more are really, really important to answer. It’s important that our younger, healthier selves make decisions, and set up systems for our older and potentially unhealthy selves.

How to make a retirement plan when you don't have kids

There is power in community

Like I mentioned, I was with my grandmother near the end of her life. And I really did see the power in community. My grandmother did have multiple children, and they were all deeply involved in her end of life planning and her end of life care. I’m also still lucky that I have my other grandmother who literally lives in one of my aunt’s houses. So what’s the thing I think we should all be doing? Building community, we absolutely are going to need people who can both take care of us and make decisions for us. And if you don’t have biological children, you’re going to need other people in your life. This could be friends, it could be other family members. It can be community members, but we’re going to need community. Building financial community and personal community, really is the crux of everything in our lives. Please don’t isolate yourself.

If you have friends that are all having kids and you’re not, be the fun aunt who goes to little Mikey’s soccer games. Be the fun uncle who goes to see Susie perform in Swan Lake, introduce yourself to your neighbors, get involved in community initiatives, volunteer your time, build community with people. Isolation quite literally kills and not having a community in your older years will be devastating. I stress community because we’re going to need people to become our power of attorney to become our health care proxies and potentially to let us live with them.

So here is the plan that I want you to follow. If you’re child-free and planning for aging. First, I want you to set up retirement accounts. Second, a will. Third, health care proxy and fourth, a power of attorney. I’m talking about investing now during your working years, so that when you retire or when you are in your 80s and 90s, you have a pile of money that you can pull from to pay for your health care expenses, your housing expenses, your food expenses, et cetera, et cetera.

Step 1: Set up a retirement account

Retirement accounts are things like a 401 K, a 403, B, a SEP IRA, a Roth IRA and a traditional IRA. There’s a lot more out there if you’re in the United States, but these are kind of the big common ones. If you’re at a job that offers a workplace retirement plan, especially if it offers a match, meaning that company is going to match the amount of contributions that you make, please take advantage of it. Please start contributing. You can start really small, it can be $25 every two weeks. It can be 50 bucks every two weeks. But please start! The earlier you start investing, the better chance you have to build wealth long term.

If you do not have a workplace retirement plan, I really like IRAs. There’s a Roth IRA and a traditional IRA. They work much the same, but a traditional IRA is better for higher earning people and a Roth is better for lower earning people. Low-earning in this case means under $100,000. Building a solid investment strategy should be everyone’s number one retirement planning step and I mean everyone– people with kids and people without kids, we should all be doing this. But this is especially important for my child-free people who will not have any children who can potentially support them in old age. And as I said earlier, please literally anything is better than nothing. I would rather go into retirement being a multimillionaire, but I’d also rather go into retirement with $300,000 to my name, then $0 to my name.

Step 2: Set up a will

The next thing I want you to set up is a will. Wills are legal documents that most people use to lay out what they want to happen to their assets and their stuff after they pass away. But you can actually put a lot more information into a will there’s also something called a living will, a living will can lay out health care directives, meaning you lay out different scenarios and how you would like your health to be taken care of if those scenarios arrive. So this is a really fantastic way for childfree people to have their healthcare wishes met, if they are incapable of making decisions on their own. And of course, a more traditional will is where we are laying out things like: I want Susie to get the glassware and I want Mikey to get the silver. You need both of these wills. Now there’s also other things that you need to lay out for your later in life care, such as your power of attorney, and possibly your health care proxy.

Step 3: Set up power of attorney

Let’s talk about those power of attorney is really important in the United States. Right now, when you are capable and clear and legally cognizant, you act for yourself, you’re kind of your own legal representative. But if you’re incapable of thinking for yourself or acting for yourself, for whatever reason, and at whatever age, you can designate somebody to make legal decisions on your behalf. This is called power of attorney. This person will be legally authorized to make decisions for you. And those decisions will carry the same weight as if you had made them for yourself. Your power of attorney can be anyone that you want. It can be a lawyer that you hire for this purpose. It can be a friend, it can be a cousin, it can be a sibling, some sort of family member, someone from your church. Your power of attorney should be somebody that you trust, and specifically that you trust to put your needs and wishes first. And that doesn’t have to be somebody that you gave birth to.

Step 4: Set up a health care proxy

A health care proxy is somebody who can make health care decisions on your behalf if you’re unable to. So if you are unconscious, or if you are deemed legally unable to decide things for yourself, a health care proxy will help determine what treatment and what drugs you receive, please designate a health care proxy and please have a living will that states how you want certain health care decisions to go especially if you are someone that is genetically biased towards certain health care conditions. If you know you’re high risk for breast cancer, if you know you’re high risk for colon cancer, put in the treatment plan that you would like to see into your living will hire someone or assign someone to be your health care proxy and tell them what you want. Because let’s face it, bodies are weird things.

I’m 35. And I’ve just had a hell of a year with my own body and my own health, you could need a health care proxy at 26 or 86. Honestly put a lot of thought into this decision because a health care proxy will play a really big role in your life. And ultimately, your health care proxy may have to decide whether or not you get resuscitated.

Step 5: Set up an executor of your will

And then finally, the last part is going to be an executor of the will. An executor is someone who administers a person’s estate upon their death, this person is going to make sure that you have the type of funeral that you want, that your couch goes to the person that you want it to and that your assets are distributed in the way that you want it. If you have this all in place, you are in really good shape. Of course, you’re going to continue to make decisions for yourself as long as you can. But having this trio in place means you’ve got a backup plan. Everybody needs this team of Avengers here, but especially every child free person, let’s talk about life insurance. I think pretty much every child-free person should have term life insurance.

But let’s talk about moving beyond term. Term Life insurance is a type of death benefit that pays the heirs of the policyholder through a specified term of time. Once the term expires, the policyholder can either renew it for another term, convert the policy to permanent coverage, or allow the term life insurance policy to lapse. So basically, you are paying into a term life insurance policy that covers a period of time, 10 years, 15 years, 30 years, a term of time that you select and if anything happens to you in that time, that benefit would pay out to your heirs.

Now I’m using the word heirs because it doesn’t have to be your kids and as child-free folks, you might want to leave your estate, or this life insurance policy to your nieces and nephews to an institution to your friends to other members of your family. But you can’t leave it unless you have it. I think term insurance is generally a good idea for child-free folk because it’s cheaper than whole life insurance. It’s more flexible than whole life insurance and there’s way fewer fees that you’re going to pay in the long run with term.

Beyond term insurance there’s also long term care insurance. Traditional long term care policies work much like policies for auto or home insurance. You pay premium, usually for as long as the policy is in effect, and make claims if you ever need the covered services, long term care insurance can be used to cover things like in home nursing, or an out of home nursing facility, you pay extra for the specific benefits that you want. Long Term Care Insurance can be very expensive.

But for some child-free people, I do think it’s a really good idea. If you are someone with a chronic illness, or like I mentioned earlier, someone who has very high risk for a specific illness, and you know that later in life is probably going to be very expensive on the health care front for you, I would definitely look into long term care insurance.

So to sum up, our end of life care planning for childfree folks should include investing for retirement, getting a will building community, determining your power of attorney, your healthcare proxy and your executor of your will, getting term insurance, and possibly getting long term care insurance. If you do all these things, you will be in a really, really good place as an older child free person. Of course, there’s more that you can add into this depending on your specific life needs.

But if you’ve got any questions about this, definitely drop them in the comments. Let’s talk about it. It’s a really, really important conversation. And please feel free to send this to any of your child-free friends or child free family members, because it’s not a topic that I see talked about a lot in our money world. We’ve also got a video below on the topic, if you’re more of a visual learner!

GET A WILL HERE: trustandwill.sjv.io/zNgN6r

GET LIFE INSURANCE HERE: https://everyday-life.sjv.io/nL4g9X

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