How Child-Free Couples Can Plan for the Future

Who Will Inherit?

Without children, handling all the business related to your death falls on your surviving spouse. Make this difficult time easier with an estate plan.

A will (the basis of your estate plan) guides the distribution of your property and names an executor to oversee your estate. This can be your spouse or someone more removed, such as a friend, attorney or sibling.

Generally, if you die without a will (intestate), your next of kin inherits everything. While your spouse is usually considered next of kin, laws may differ from state to state. If you want to leave your gold watch to a nephew or cash to a favorite charity, you can do so with a will. Your will can also specify who inherits your assets if you and your spouse die at the same time. Otherwise, the court will distribute your assets to your closest living relative (maybe your mean Aunt Mabel). If no relatives are found, your property usually goes to the state.

Assets co-owned with your spouse, such as a joint bank account or real estate held in joint tenancy, tenancy by the entirety, or community property with right of survivorship, generally transfer to your spouse even without a will. Some assets, such as life insurance payouts, retirement accounts or property held in a living trust, are distributed based on the named beneficiary, not a will.

Most people name their spouse as beneficiary, but this isn't always the best option. If your spouse can't manage money, you could choose a trusted family member to administer the insurance payout or retirement account for them.

Who Will Take Care of You Later in Life?

Planning for later-life care is critical for child-free couples. Consider these questions:

Who Will Have Power of Attorney?

A medical power of attorney (or health care power of attorney) authorizes someone to make decisions about your healthcare if you can't—for example, you're unconscious. A living will is similar but focuses on end-of-life care.

Another important document, a financial power of attorney, gives another person the power to handle your financial affairs, such as paying your bills or taxes. While they usually aren't necessary until you're older, having these documents in place early on can provide peace of mind.

How Will You Pay for Health Care in Retirement?

Retiring early, before you're eligible for Medicare at age 65, means finding health insurance. Some employers offer health insurance for retired employees (and even pick up part of the tab). Depending on your age, purchasing COBRA coverage through your former employer could tide you over until Medicare kicks in. COBRA coverage can be expensive; health insurance through your state's health insurance marketplace or Healthcare.gov may be more affordable.

Along with health insurance premiums, budget for copays, deductibles, coinsurance and medical expenses not covered by insurance. Using a health savings account (HSA), either at your job or purchased from a brokerage firm, lets you put aside pretax funds and withdraw them tax-free for qualified medical expenses.

What if One or Both of You Needs Long-Term Care?

If you or your spouse become incapacitated, nursing home or home care costs could sap your retirement savings. It's estimated that about half of men and 60% of women will need some type of long-term care after age 65, according to the 2025 Milliman Long-Term Care Index.

Medicare and private health insurance cover a limited period of skilled nursing care, but don't cover long-term care or assistance with bathing, dressing and other activities of daily living. If you expect a very low income in retirement, Medicaid may pay for your long-term care. If you're wealthy, you could pay for long-term care out of pocket. If you're somewhere in the middle—or not sure what the future will bring—consider buying long-term care insurance.

Long-term care insurance pays for skilled care and assistance with daily living. It's expensive—typically costing several thousand dollars annually, depending on your age, gender and amount of coverage—but with a semi-private room in a nursing home averaging $9,581 per month, it can be well worth the cost. You'll generally have to pass a medical exam to buy long-term care insurance; if you wait too long, you might not qualify.

Where Will You Live?

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

A down payment and mortgage aren't the only costs of owning a home; you'll also face property taxes, homeowners insurance and maintenance costs. Renting and investing the difference could deliver a similar return on investment as buying a home, while providing more liquid assets. Another option: Use the money you save to build an emergency fund or pay down credit card debt.

Can You Retire Early?

Raising a child to age 18 costs approximately $320,000, according to federal government data adjusted for inflation by Northwestern Mutual. What could you do with that extra $17,777 per year? Stash it in retirement accounts and other investments, and retiring early could be reality. Whether that means embracing the FIRE movement ("financial independence, retire early") or gradually phasing into retirement is up to you.

The sooner you start saving for retirement, the more time your money has to grow. A nest egg of $1 million is often cited as a basic retirement goal. If you plan to retire at 65 and begin saving at age 25, putting aside $232 per month gets you there. Wait until age 45, however, and you'll have to sock away $1,545 monthly.

If you plan to retire early, consider investing some of your funds via a brokerage account. Taking money from a 401(k) or traditional IRA before age 59½ triggers income taxes plus a 10% penalty on the amount you withdraw.

What Are Your Priorities?

Once retirement and health care concerns are handled, and you've got an emergency fund to tide you through three to six months without an income, how else will you spend the money you're saving on babysitters, Little League fees and college tuition? Do you want to travel the world, go back to school or start your own business?

Figure out your priorities and build them into your budget. If travel is your passion, for example, set up regular automatic transfers into a sinking fund for vacation expenses, and use travel rewards credit cards to earn free miles or hotel stays.

A Future of Freedom

As a child-free couple, your path to financial freedom likely looks different than the average person's. Consider consulting a financial planner and estate planning attorney who can advise you on your options and tailor plans for your objectives. Whatever your financial goals, maintaining good credit can help you achieve them, so sign up for free credit monitoring to keep an eye on your credit score.