Americans without kids are considerably less confident about meeting their retirement goals than those with kids, according to a new report.
It’s a somewhat counterintuitive finding, given the soaring cost of raising children in the US. DINKS, as they’re known — Dual Income, No Kids — presumably have more funds available to set aside during their prime working years. But the Allianz Center for the Future of Retirement found the opposite is true.
“You’d expect fewer major expenses like childcare and a kid’s education to mean more security,” Kelly LaVigne, vice president of Consumer Insights at Allianz Life, told Yahoo Finance.
His take on the findings: When you become a parent, a blaring financial wake-up call sounds that pushes you to make a plan for managing money right now and forces you to focus on both your future financial security and the next generation’s.
“But if that wake-up call never comes, you can fall behind,” LaVigne said.
“Not having kids can create a false sense of financial comfort. Your day-to-day feels manageable, so retirement planning stays in the background,” he added.
There are plenty of people in this boat. Roughly one-quarter of American adults in their 50s and more than 2 in 10 of those in their 60s have never had children.
Those numbers are probably higher now, as more young adults say they don’t plan to have children.
Parents aren’t saving as much as they should
Parents, of course, wrestle with their own trade-offs. Among those not saving as much as they would like for retirement, many say that saving for their kids’ education takes priority. Childcare costs are another hindrance, according to the Allianz report.
Americans with kids are also more likely than those without to say credit card debt and car loan debt hold them back from saving for retirement.
Nearly half say they considered (or would consider) the potential challenges in saving for retirement as a significant factor when deciding whether or not to have children. For millennials — those between 30 and 45 years old — that jumps to more than 60%.
Estate planning — for pets
Aside from not feeling like they are saving enough for retirement, many folks without kids aren’t taking the leap to put together a financial plan, Allianz found.
Among people without children, 62% do not have a written financial plan, versus 42% of parents.
That means putting in place essential estate planning documents, including a healthcare proxy and durable power of attorney, which allow the people you pick to make medical and financial decisions for you if you can’t. You also need an advance directive that states your wishes regarding medical treatment, and a HIPAA release permitting medical providers to share your medical information.
