The biggest impact a plan sponsor might have on employees without children may be to get away from treating those families as ahead of the game on retirement planning solely because they don’t have children. Plan Sponsors can help childless employees with their special needs in retirement by providing information on long term care, donor-advised funds, and the IRS’s special rules on catch up amounts.
If you ask parents with college bound teenagers about childless couples and retirement planning, they are sure to grown with envy. But if you ask those childless families about their retirement, they won’t necessarily beam about their prospects. Why? While its true that its more expensive than ever to raise children, the prospect of living longer without having children to assist or fall back on may be more of a worry to childless families than you’d think.
The number of Americans without children is reaching a peak rate. The number of women ages 15 through 44 without children is now 50%. Most estimates hold that about a quarter of all couples do not have children. The needs of those 25% for retirement planning may be mostly similar to a company’s other employees with a few exceptions.
Some analysts refer to childless couples as DINKs, for “Double Income, No Kids,” but that wouldn’t paint a complete picture of how most childless couples live today. They may be caring for an elderly parent or may soon house the elderly parent, thus making them childless families, not necessarily childless couples. And some analysts also view those DINKS as spending the potential savings from not having children on non-essential items, like vacations. But those analysts may have missed that many of those childless couples didn’t choose to be childless. One article written on this topic mentioned how DINKs opted away from spending money on “screaming babies” to be put to better use. Such lack of sensitivity towards a childless family is a surefire way to lose the focus of that family, and probably indicates a lack of understanding of the realities of childlessness in America today.
Specifically, some of those childless families spent precious retirement funds on infertility treatments. In an article in SELF magazine, one woman reported paying $63,000 for treatments using a mix of using her savings, inheritance, and by taking out loans against her 401(k)s. Another, in Women’s Health, reported paying $125,000 for infertility treatments, as almost all such treatments are not covered by health insurance. Childless couples that used savings and potential retirement funds for infertility treatments that failed may need to set up their financial planning to take advantage of the IRS catch up rules to replace that money.
As childless families won’t have children to rely on for care should they require home health assistance or develop neurological deficits, long-term care insurance is a near necessity. Childless families may also need to consider setting aside additional funds in retirement for assistance with small household chores, such as trips to furniture stores, holiday shopping and lawn maintenance that children might provide to elderly parents.
Childless families may have more estate planning needs, as inheritance plans may be more complex than with families with children. Even if the couple doesn’t plan to bequest outside of relatives, they may want to increase their charitable donations. Without children who can attest to the wishes of the parents, bequests should be detailed with greater precision. Childless families may need more in-depth discussion of those wishes, and of special donation methods, such as donor-advised funds.
Plan Sponsors can help their childless families with their special needs in retirement by providing information on long term care, donor-advised funds, and the IRS’s special rules on catch up amounts so that those families can recapture the funds they would have used for retirement that were directed to infertility treatments. Plan Sponsors can also help childless families by addressing their additional time constraints placed by potentially caring for elderly parents without having teenage or young adult children to help with household chores.
While those specifics can be helpful to childless families, the biggest impact a plan sponsor might have on employees without children may be to get away from treating those families as if they are ahead of the game on retirement planning solely because they don’t have children.
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