Often, financial planning – especially estate planning – is focused on children and heirs. But if you have no children, your financial planning needs are different from families with children. What have you and your partner potentially overlooked?
Childless couples generally need less life insurance than couples with kids. But that’s not to say they don’t need it at all. Many childless couples have a lifestyle supported by two incomes, and in the event of an unexpected death, it may prove impossible for the surviving partner to maintain his or her standard of living. That said, life insurance needs for childless couples generally decrease with age as savings accumulate; therefore permanent life insurance policies, such as whole life, are generally less necessary for childless couples.
People often rely on younger family members to provide the basic elements of long-term care – household chores, shopping, cooking and the activities of daily living. However, in the absence of younger family members, long-term care insurance can be particularly important and can help cover costs from home care, assisted living facilities and hospice care.
More affluent childless couples may be willing to pay out of pocket for their long-term care needs. After all, preserving wealth and assets for heirs isn’t necessarily a priority. However, long-term care can be quite expensive, and it is worth weighing the costs of insurance versus average long-term care expenses before forgoing long-term care insurance.
Let’s be clear: childless couples, as any adored niece or nephew can tell you, are not without family. And many choose to name family members – or even particularly close friends – heirs to their estate and beneficiaries on their IRA or 401(k) accounts. Others choose to designate an organization to receive those monies when they pass, structuring their estate plans to benefit a charity, alma mater or other worthy recipient when they pass. In absence of a will or estate plan, assets are distributed according to the laws of the state upon death. A financial advisor affiliated with Waddell & Reed can help couples structure an estate plan to benefit the people and organizations of their choosing.
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