How Retirement Planning May Differ Without Heirs
Retirement planning advice is often intended for a family with children. Strategies generally revolve around an assumed lifecycle, which includes asset accumulation during an individual’s early working years, a child-rearing stage in which assets and expenses increase to pay for family-related expenses, a stage in which individuals plan for retirement and, eventually, a stage focused on transitioning assets to the next generation.
This strategy often focuses on saving for large expenses, such as childcare, college, a large family home and other child-rearing expenses. It also places a strong emphasis on maximizing the financial legacy available to pass along to the next generation.
This family-focused approach may not be appropriate for individuals and couples who don’t have children. In fact, those without children often have very different considerations, priorities and challenges that must be carefully planned for, including the following.
Increased savings potential
A recent study showed that the annual cost of raising a child in 2025 is $29,419.[1] That means individuals and couples without children may be able to grow their assets more quickly than those raising a family.
Let’s say you decide to invest that $29,419 for 18 years. If you were to invest $2,451 each month and experience a 5% average annual rate of return, your assets would have the potential to grow to $827,429.70 over those 18 years.[2] That’s a significant amount of savings you can use to enhance your lifestyle throughout retirement.
Work flexibility
Individuals and couples who don’t have children often have more flexibility in their careers, because they don’t have others depending on them for income. Many child-free individuals are able to take time away from the office throughout their careers and retire significantly sooner than their family-raising peers.
While it’s nice to have this flexibility, it’s important to plan carefully for an early retirement. One of the biggest risks of retiring early is the potential to outlive your retirement savings. For example, if you retire at age 55 and live until age 90, you’ll need enough retirement savings to last for 35 years. Also, keep in mind that throughout all these years in retirement, inflation will likely erode some of your spending power, which makes it important to carefully plan for both longevity and an increased cost of living.
Long-term care considerations
An important retirement planning challenge for those without children is planning for long-term care in retirement. According to the U.S. Department of Health and Human Services, approximately 70% of people who reach age 65 will require long-term care support at some point in their lives.[3] And the cost of long-term care can be incredibly expensive, averaging $6,292 per month for a home health aide, $5,350 per month for an assisted living facility and more than $9,700 per month for a private room in a nursing home.[4]
If you don’t have children to provide future care or support, you’ll need to plan in advance to cover the cost of these services. It may make sense to purchase a long-term care insurance (LTCI) policy to help pay for in-home care assistance, nursing home expenses and assisted living facilities.
However, these policies are typically expensive, and the costs of implementing LTCI may outweigh the benefits, especially if you end up not needing long-term care. For some people, it makes more sense to invest in a diversified investment portfolio rather than purchasing LTCI.
The decision of whether to purchase LTCI depends on many factors, including your current financial situation, goals for the future, age, health history, legacy goals, etc. Your wealth manager can help you determine whether LTCI makes sense for you.
Estate planning
Proper estate planning is important for everyone, not only those with children. In addition to clarifying how your assets will be distributed following your death, estate planning documents can help protect your best interests, should you become incapacitated and unable to make decisions on your own.
Consider working with an estate attorney to draft the following estate planning documents.
Durable power of attorney
Power of attorney is a legal document that allows you to designate an individual to make financial decisions on your behalf, should you become unable to do so on your own. If you become incapacitated without a durable power of attorney, your loved ones will need to go before a judge to request authority to handle your financial affairs. The probate court must then hold a public hearing to appoint an agent to act on your behalf. This can be a lengthy and expensive legal process.
Once the court appoints an agent to handle your finances, you no longer have a right to manage them on your own. And the designated agent will likely need to post a bond, which serves as insurance in case he or she steals or mishandles your assets. The agent will also need court approval to make certain financial transactions on your behalf.
All this can be avoided with a properly executed durable power of attorney. Not only can this document potentially save your loved ones a lot of headaches, time and money but it will also allow you to select the person managing your assets.
Healthcare power of attorney
Similar to a durable power of attorney, a healthcare power of attorney is a legal document that allows you to designate an individual to make medical decisions on your behalf, should you become unable to do so. This document specifies exactly what types of interventions you agree to and provides authority to a loved one to carry out your wishes.
Will
A will is an important estate planning document for everyone, regardless of your marital status or family situation. Not only does a will specify your wishes regarding asset distribution but it can also help minimize estate taxes and legal challenges to your estate.
A will also allows you to designate an executor to settle your estate, make sure your debts are paid and coordinate the distribution of your assets. Without a will in place, the court will appoint an executor who will distribute your estate according to your state’s succession laws. For unmarried individuals with no children, succession laws typically distribute assets first to the deceased’s parents then to other relatives, such as aunts and uncles or cousins.
In a real example of why proactive planning matters, my aunt passed away before her parents (my grandparents) and hadn’t updated her will or beneficiary designations. As a result, her assets were passed to them by default. When they then passed away just a few years later, those same assets had to go through probate again, which could have been avoided if my aunt had proactively named her siblings as her beneficiaries. They were already likely to inherit their parents’ estate, so this small step would have reduced the legal burden and unnecessary costs for the family.
If you have no heirs and no will, your assets will become property of the state. To prevent your hard-earned assets from being handed over to the state, it’s important to have a record of your wishes formally documented in a will.
Could you use help with your retirement planning strategy? Creative Planning is here for you. As a nationally recognized wealth advisory firm, we deliver a team of credentialed, educated, experienced and action-oriented advisors, including CERTIFIED FINANCIAL PLANNER® practitioners, certified public accountants, insurance specialists, attorneys and other professionals dedicated to helping you achieve your goals. We work together to help ensure all aspects of your financial life are well cared for.
