5 important financial planning considerations if you don’t have children

Statistics show that an increasing number of people in the UK are reaching retirement age without having children.

According to a report from the Office for National Statistics (ONS), there were 23,000 women aged 80 years who had never had children in 2019. By 2045, this number is set to rise to 66,000, and patterns are expected to be similar for men.

If don’t have children, you may find that your goals for the future are slightly different from those who do have children.

It’s a common misconception that people without children don’t need such a thorough financial plan because they don’t have dependants, but this couldn’t be further from the truth. Regardless of your family situation, it’s vital to think carefully about the future to ensure you have enough resources to support you through each stage of your life. 

Below are a few things you should consider in your financial plan if you don’t have children.

1. What would you like to achieve with your wealth?

While it is the starting point for every financial plan, if you don’t have children there are often many possible answers to the question of what you want to achieve with your wealth. While some people will be saving up to help their children to pay for university, their first home, and eventually to pass on an inheritance, you aren’t constrained by these necessities.

The choice that is on offer to you as a child-free person can be exciting but also daunting. Would you like to retire early? Would you like to take a sabbatical to travel the world? Would you like to support a charitable cause?

The answer to this question will be the starting point of your financial plan, so it can be helpful to take plenty of time to really think through what you want from life.

2. How much risk do you want to take on your investments?

Your investment strategy is unique to you because your circumstances and goals are yours alone. Not having children means that the decisions you need to make about your wealth may come from a different perspective than your peers who do have children.

For example, you may need to keep fewer liquid assets to hand, as you don’t need access to cash to cover things like childcare or university costs. You might also decide that you want to allocate a greater proportion of your income to pension contributions. This could enable you to benefit from tax relief as well as potential returns on your portfolio.

It’s sensible to speak to a financial planner to explore your appetite for risk thoroughly alongside your goals so that you can build a suitable investment portfolio.

3. How will you fund later-life care?

As people are typically living longer, it’s likely that most of us will require some form of social or healthcare as we get older.

According to carehome.co.uk, the average monthly cost of residential care is £3,290, or £39,520 a year. The average monthly cost of nursing care in a care home is £4,160 a month, or £49,920 a year. If your estate is worth more than £23,250 at the time of you requiring care, you will need to cover the full cost yourself.

So, even if this feels far away, it’s important to factor it into your financial plan so that you can pay for the care that you may need in later life.

4. Who will help you to make important decisions if you lose mental capacity?

As well as planning for the costs of later-life care, it’s important to consider who will help you to make decisions about your health and finances if you lose the mental capacity to do so.

This might be a trusted friend, relative, or neighbour. Alternatively, you could appoint a professional to make decisions on your behalf, such as a solicitor.

Once you’ve chosen someone you trust, you can apply for a Lasting Power of Attorney. This means that if you lose mental capacity to look after yourself or make financial decisions, your “attorney” can ensure you receive the necessary care and support.

5. Who would you like to inherit your estate after you die?

Writing a will is an important part of your financial plan as it ensures that your assets are distributed according to your wishes after you die. If you die without a will in place, the laws of intestacy will dictate how your assets are distributed, and this won’t take your wishes into account.

You may wish to leave a gift to charity in your will, or leave your wealth to your partner, a sibling, friend, or neighbour.

In addition to writing clear instructions about your wishes, you may also want to select a trusted friend or relative to act as the executor of your will. This is the person who will ensure your wishes are carried out correctly, so make sure they are aware of this responsibility beforehand.

Of course, you may not wish to leave assets to anyone after you die. If you’d prefer to enjoy the wealth you have accumulated during your lifetime, this decision can help you to plan your lifestyle and your finances.

Remember, though, that planning for every eventuality, including the possibility that you may pass away earlier than expected with a significant estate, is still a useful exercise.

Get in touch

If you’d like to learn more about how we can help you to create a financial plan that helps you to achieve your goals whatever your circumstances, please get in touch. 

Email theteam@fortitudefp.co.uk or call us on 01327 354321.

Please note

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. 

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.