A couple of weeks ago I wrote about our decision to remain child-free and how that decision (while not based on money) has made it easier for us to remain out of debt. Several respondents wondered who would take care of me in my old age if I didn’t have kids. Wasn’t I giving up security in my old age by choosing not to have kids who could look after me?
The answer to that question is this: I will take care of myself in my old age and that is, at least partly, why remaining debt free is so important to me. It allows me to save large amounts of money to put toward my future care. Since I know that I will “have no one to look after me,” I have to make certain that I have adequate funds, insurance contracts, and legal protection in place to ensure that I am cared for in a manner that suits me, in the event that I am unable to do so myself. All of that requires large amounts of cash that would be eaten up if I had to make debt repayments.
Of course, even if I had kids I would not expect them to take care of me. Things happen in life. A kid might get a job offer in a far away state or even another country. Kids grow up and have families of their own that take precedence over caring for an aging parent. I would not expect or want a child to give up his or her dreams in order to take care of me. There is also the possibility that a child may not want to take care of an aging parent. Whether because the relationship is strained or the child simply isn’t responsible enough to shoulder the burden, I certainly would never count on a child to be my security net. I’ve seen too many people who thought their kids would be there for them, only to find out that life got in the way and the kids either had other responsibilities or zero interest in helping out. Having kids is no security net to make certain you are cared for in your old age. Even with kids, the only one who can be sure you’ll be cared for in your old age is you. It’s great if the kids want to help out, but to plan using that assumption is risky.
So how exactly does a child free person go about making sure they are cared for later? As I said, remaining debt free is critical. Because we have no debt we’ve managed to amass a nest egg of over a million dollars already. Since we live very low to the ground and spend only on thing that we really value, we have a lot of extra cash to work with. We save most of our raises and “bonus” income.
We stash the maximum allowable into 401K’s and IRA’s in order to take advantage of the tax breaks. We have several other investment accounts that are for mid-range and longer term goals. We’re putting money away in a separate, low risk account that is designated for health needs in our retirement. Yes, our 401K’s will cover some of those expenses, but the way medical costs are rising and Social Security and Medicare are declining, I’m planning as though I will need to buy my medical insurance myself, or pay for everything out of pocket. It’s a scary thought because I know how expensive that will be. But I’d rather be over-prepared than unable to meet my basic health needs.
I also make certain I have up to date wills, trusts, insurance policies, and other legal documents that clearly spell out my wishes as to how I want to be cared for and how I want any remaining assets to be distributed upon my death. These documents ensure that I receive the care I want, from the organizations and individuals that I trust, not just from whomever the state decides to send me to. If I can’t make any decisions for myself, it is all clearly spelled out in my legal documents. Since I have no kids to speak for me, I have to speak for myself and it has meant spending a decent sum of money on lawyers. I don’t like it, but even if I had kids it would still be something that I would have to do. I wouldn’t be able to trust that my kids would be available to speak for me, or that they would “get it right.” Emotions are funny things and I wouldn’t want a kid to have to decide whether or not to pull the plug. Even if you have kids you need to make certain that your wishes are clearly spelled out in legal documents.
We don’t save only for our old age; there are some things that we spend on now and that we save for in the near future. However, about fifty-percent of our money goes to preparing for our old age. The truth is that most people my age aren’t saving nearly enough, hoping instead that the government or their own kids will save them. So instead of preparing for old age, they’re buying bigger cars and houses and nice clothes instead of stashing that money. I’m planning to take care of myself, completely on my own. It will be nice if I get money from Medicare or Social security. Then I can use some of my money for fun stuff. But I can’t bet on it. I don’t feel like I can afford to direct any of my money to debt payments because I know I will need it later. And a lot of it. And if I end up over-prepared and die with a fortune left over? Then some charities are going to have a very nice windfall coming their way.
Kids are not an insurance policy. Even if I had them I would be taking the exact same steps to deal with my care. Remaining debt free and saving the resulting cash, whether with or without kids, is one of the most powerful wealth building tools available to see you through your old age.