Known as DINKS for short – Dual Income, No Kids – the phrase describes couples who have chosen not to have any biological or adopted children. Since child-free working couples tend to have greater discretionary income they have more flexibility when planning for retirement.
A Growing Number Of Americans Have Opted Out Of Parenthood
According to the U.S. Census Bureau, 1 in 6 adults age 50 and older do not have children and this amounts to about 15.2 million adults. Additionally, according to Pew Research, 44% of people under age 50 without children don’t expect to have any children in the future. With more and more childless couples entering retirement in the coming years, traditional financial planning advice may not apply.
When It Comes To Retirement, DINKS Can Save More & Spend More
It’s been estimated that the average cost of raising a child through age 18 is nearly a quarter-million dollars, an amount which increases substantially when you add in college tuition and related expenses. Of course, this estimate can run higher or lower depending on where you live.
Either way, it’s clear that childless couples can save significantly more if they set aside this money for retirement. With more money in your Thrift Savings Plan (TSP), you can easily withdraw more than the traditional 4% often recommended for retirees. As a result, DINKS can afford to spend more throughout their golden years.
“For DINKS who can take large distributions, tax planning is crucial especially when it comes to Required Minimum Distributions (RMDs).”
DINKS Need To Plan Ahead For Taxes & RMDs
As you know, money withdrawn from your tax-deferred TSP balance is subject to federal income taxes. For DINKS who can take large distributions, tax planning is crucial especially when it comes to Required Minimum Distributions (RMDs). If you or your spouse have a larger-than-average balance in your TSP, 401(k), and other tax-deferred retirement accounts, you’ll need to be accurate when calculating your RMDs. Otherwise, you may be hit with unexpected IRS penalties.
DINKS Should Buy Long-Term Care (LTC) Insurance
Having adult children doesn’t guarantee they’ll care for you when you’re unable to do so yourself. However, when you don’t have kids to rely on in your old age, failing to plan for the cost of long-term care is an even bigger risk. All the money you’ve saved by choosing to be childless may be spent on non-medical care in a facility. In fact, the out-of-pocket cost of custodial care in a nursing home can run as high as $10,000-plus per month if you haven’t purchased LTC insurance.
To learn more, connect with an FRC® trained advisor.
