Retirement Advice for DINKs (Dual Income No Kids)

Retirement advice tends to focus on families with children, including balancing the costs of raising children and attending college while saving enough for retirement. But not all couples have children. Dual-income households without children (DINK) have two incomes and no children. Your retirement strategy may differ from that of the average couple if you're a DINK because some of the standard retirement planning rules don't apply.

Key takeaways

  • “Dual income, no children” is a phrase used to describe households with two incomes and no children.
  • DINKs tend to have higher disposable income, in part because they don't have the expenses associated with children.
  • DINKs may be able to spend more than the recommended 4% during retirement or retire earlier because they have more money to save and invest.
  • You may have a higher tax liability if you don't have children, so you may need to find tax-efficient investments.

The cost of raising a child

Parents tend to underestimate the cost of raising a child. In a 2022 report, Brookings estimated that the cost of raising a child born in 2015 to age 17 was $310,605 for necessities, excluding college.

This figure was based on a previous calculation released by the U.S. Department of Agriculture (USDA), which estimated that the cost of raising a child for a middle-income married family with two children was $233,610 in 2015.

Brookings adjusted the USDA figure for inflation using an annual rate of 2.23% between 2015 and 2020. The institute used an inflation rate of 4% starting in 2021.

This puts extra money in your pocket if you're a DINK. This works out to approximately $18,270 per year, or $310,605 ÷ 17: the total cost divided by the number of years.

What to do with that extra money

What could you do with the more than $18,000 a year you would save by not having children? You may want to consider the following:

  • Save and take a vacation
  • Pay off your debts, including your mortgage or credit card debt
  • Make a major purchase, like that big screen TV you've been eyeing

…or you could save for retirement.

Retirement planning is much easier for DINKs than it is for parents. Investing that money right away can go a long way toward growing your nest egg. Another thing to consider about saving some or all of this extra money for retirement is that it can provide you with generous tax benefits. You will save on your tax bill if you:

The 4% rule for retirement

A popular financial rule is that actuarial trends, cost of living expenses, and per capita income data can be rolled up into one convenient number for retirement planning purposes. This figure is 4%.

The 4% rule says that this is the percentage you should be able to withdraw from your retirement fund each year without worrying about running out of money. This assumes you are leaving the workforce at traditional retirement age (65 or 66) and therefore need a nest egg totaling 25 times your annual expenses.

The 4% rule may be a good theory, but is it valid in the real world? Bill BengenThe Certified Financial Planner (CFP) who popularized the rule in the early 1990s acknowledges that 4.5%, 5%, or even higher might be appropriate for investors positioned in securities with significantly higher volatility and lower rates. potentially higher yields (RoR ).

The 4% rule may not apply to you if you saved an additional $18,270 each year over the 18 years of your working life. You could withdraw more than 4% and spend a little more extravagantly each year of your retirement or you could even retire earlier if you've been diligent.

Taking 3% out of a $1.5 million retirement account is the same as taking 4% out of a $1.125 million retirement account. Spend your working years accumulating the $375,000 difference and you could potentially retire eight years early.

DINKs can save (and invest) more

How much extra money can you save and invest if you don't have children? Grossly simplifying all variables, let's assume that a worker without children can actually save an additional $18,270 per year for 17 years. And let's start at 25, a reasonable age to have your first child.

A 4.5% rate of return compounded annually allows the diligent person without children to benefit from an additional $490,642 that a parent does not have. Now assume that the money remains invested at 4.5% without any further contributions until age 65. Your balance reaches $1,350,328.

A couple who does not have children increases their ability to expand their retirement fund. Consider that both partners receive an employer match on 401(k) contributions. The 401(k) contribution limit per person in 2023 was $22,500. It increased to $23,000 in 2024. The path to retirement becomes significantly broader and smoother if the partnership is able to maximize its contribution each year and receive an employer match.

Taxes and life insurance

“One caveat would probably be their tax situation,” says one investment consultant. Dominique J. Henderson Sr., owner of DJH Capital Management LLC in DeSoto, Texas. “A typical couple without children will have a higher tax liability and will therefore need to find more tax-efficient ways to invest.”

He also points out that less life insurance will likely be needed. “The surviving spouse would return to work at some point and still have no dependents to support, so this number is much lower than a typical family.”

Special Considerations

Much of the same retirement advice for parents still applies to couples who don't plan to raise children. Defer Social Security payments until age 70½ and be strategic about when and how to use spousal benefits. Do not cash out your 401(k) early as this will result in a 10% penalty.

Refinance your mortgage loan at a more attractive rate if the opportunity arises. This should be relatively easy since you and your spouse likely have a higher combined credit score due to your greater ability to make mortgage payments, thanks to two incomes and no children.

Can I retire early without children?

Every individual’s financial situation is different. Living without children can significantly reduce monthly expenses, allowing a couple to put more money aside for retirement sooner. However, raising children who have successful careers can allow a parent to opt out of work if they can rely on their children financially.

What is the financial downside of being DINK?

DINKs often do not benefit from the favorable tax benefits enjoyed by other taxpayers their age who have children. Consider child tax credits or the ability to claim additional dependents on your tax return. But people with children often have higher living expenses due to having more humans to support. The IRS rewards sacrifice with tax incentives and assistance.

How much money do DINKs need to retire?

Couples without children may need less money than their counterparts because they don't need to financially support others, even in retirement. But DINKs may have more opportunities to travel or move because they don't have family to support, so they may have higher and potentially less healthy spending habits.

The essential

Not everything is quantifiable. The psychological rewards that come with seeing your child graduate from college, raise your own family, or even just grow up without ever getting arrested are difficult to quantify. However, not having children is not always a personal decision or one based on financial security.

Retirement advice is different for two-income households without children. The absence of costs associated with raising children can ease families' transition into retirement.



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