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Planning Your Future as a Child-Free Couple

Being child-free comes with its own set of advantages and challenges. While you might enjoy leisurely Sunday mornings instead of spending them at a soccer field, questions about your future care and estate planning become more pressing. At O1ne Mortgage, we understand these unique financial circumstances and are here to help. Call us at 213-732-3074 for any mortgage-related needs.

Who Will Inherit?

Without children, your surviving spouse typically handles your estate. Simplify this process with a comprehensive estate plan. A will is essential, guiding the distribution of your property and naming an executor. This could be your spouse or a trusted friend, attorney, or sibling.

If you die without a will, your next of kin inherits everything, which is usually your spouse. However, state laws can vary. A will allows you to leave specific items to individuals or charities and specify who inherits if both you and your spouse pass away simultaneously. Without a will, the court will distribute your assets to your closest living relative, or to the state if no relatives are found.

Assets co-owned with your spouse, such as joint bank accounts or real estate, generally transfer to your spouse without a will. Life insurance payouts, retirement accounts, or property held in a living trust are distributed based on the named beneficiary. While most people name their spouse, you might choose a trusted family member to manage these funds if your spouse isn’t financially savvy.

Who Will Take Care of You Later in Life?

Planning for later-life care is crucial for child-free couples. Consider who will have power of attorney. A medical power of attorney authorizes someone to make healthcare decisions if you’re incapacitated, while a financial power of attorney allows someone to manage your financial affairs.

Health care in retirement is another important consideration. If you retire before Medicare eligibility at 65, you’ll need health insurance. Options include employer-provided retiree health insurance, COBRA coverage, or insurance through your state’s marketplace. Budget for premiums, copays, deductibles, and other medical expenses. A health savings account (HSA) can help you save pretax funds for these costs.

Long-term care is another significant expense. Medicare and private insurance cover limited skilled nursing care but not long-term care. Medicaid may help if you have a low income, while the wealthy might pay out of pocket. For those in between, long-term care insurance is a valuable option, though it can be costly and requires a medical exam.

Where Will You Live?

Without children, you have the flexibility to choose a smaller home or apartment, reducing living expenses. The quality of local schools isn’t a concern, potentially opening more affordable neighborhoods.

Buying a home in major metropolitan areas can be more expensive than renting. Consider the costs of a down payment, mortgage, property taxes, homeowners insurance, and maintenance. Renting and investing the difference might offer similar returns while providing more liquid assets. Alternatively, use the savings to build an emergency fund or pay down debt.

Can You Retire Early?

Raising a child to age 18 costs an average of $310,605. Investing this money could make early retirement a reality. Whether you embrace the FIRE movement (financial independence, retire early) or gradually phase into retirement, the sooner you start saving, the better.

A nest egg of $1 million is a common retirement goal. Starting at age 25, saving $232 per month can get you there by age 65. Waiting until age 45 requires saving $1,545 monthly. Consider investing through a brokerage account to avoid penalties on early withdrawals from retirement accounts.

What Are Your Priorities?

With retirement and healthcare plans in place, and an emergency fund established, how will you spend the money saved on childcare expenses? Whether it’s traveling, furthering your education, or starting a business, identify your priorities and budget accordingly. For example, set up automatic transfers to a travel fund and use rewards credit cards for free miles or hotel stays.

A Future of Freedom

As a child-free couple, your financial journey is unique. Consulting a financial planner and estate planning attorney can help tailor plans to your goals. Maintaining good credit is also crucial, so consider signing up for free credit monitoring to keep track of your credit score.

For any mortgage-related needs, O1ne Mortgage is here to assist you. Call us at 213-732-3074 to discuss your options and secure your financial future.

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