* This article was originally published on August 24, 2022. It has been updated for 2024.

For SINKs and DINKs, financial planning is … different.

What are SINKs and DINKs, you ask? SINK is an acronym for “single income, no kids.” And if you guessed that DINK stands for “dual income, no kids,” you’re right! But there’s much more to approaching financial planning for folks in the “no kids” camp than the simple fact that they don’t have children.

I’m sure you can imagine that people choose not to have children for as many reasons as others choose to add kiddos to their families. I define the “no kids” piece of the SINK and DINK as people who don’t currently have kids and who aren’t planning to add children to their families in the future. They have made the intentional decision not to have children.

According to my definition, SINKs and DINKs are childfree.

What about those who don’t have kids now but who might or who definitely plan to in the future? Or those who wanted kids but weren’t able to adopt or have children?

As you’ll hear in an episode of FPFoCo’s own podcast Money & Taxes from Bb to XYZ that’s due to drop tomorrow, our special guest introduces me to a new set of acronyms. Dr. Jay of the financial planning firm Childfree Wealth taught me “DINKY” and “SINKY.” Aside from the income parts of the acronyms, the endings stand for No Kids Yet.

In the financial planning space, this tiny three-letter word plays an important role. That’s because folks who are open to adding children to their families, those who want kids, and those who are past their childbearing years with no current intention to adopt likely planned or are planning financially or otherwise for children. They’re childless. The distinction here is that they lack the children who they want or wanted.

Those who are childfree, on the other hand, have chosen to live their lives free from having children of their own. A couple of years back, I stumbled across an article about childfree life and a podcast episode on the childfree movement that stuck with me. They got me thinking about what makes financial planning unique for childfree people, and I wanted to share them with you here.

Planning Today

Every time I prepare Cash-Flow Planning Worksheets for clients like you, I’m reminded how cash flow is different for SINKs and DINKs. Simply put, day-to-day planning considerations for them don’t include children. The big ones? No costs for raising children, childcare, or education expenses.

This creates opportunities. Did you know that the cost of raising a child to age 17 averages over $310,000? And that’s just one child! The statistic is based on a middle-income family with two children, meaning that the parents could be expected to spend more than an estimated $620,000 on raising their children alone. One part of that expense is childcare, which averaged $11,582 per year per child in 2023 — or more than $23,000 per year in total for two kids.

Add to that one big planning goal for many clients with children: College. The average cost of a four-year education at an out-of-state public university is $28,240 annually. Multiply that times four with inflation added each year — and don’t forget about room and board as well as other cost-of-living expenses, which make that cost $45,240 per year per child on average!

While some SINKs and DINKs may assist friends and family members with their or their children’s living expenses, not having these costs in part or at all makes a huge difference in planning annual and lifetime expenses. This means that folks without kids may be able to achieve other goals earlier in life or have more cash-flow flexibility along the way.

To maintain cash flow for that flexibility, long-term disability insurance is important for DINKs, but it’s crucial for SINKs. That’s because single individuals don’t have a spouse or partner to rely on for income if they’re not able to work. Enter disability insurance, which replaces a portion of income in the event of, you guessed it, disability. And since a disability can last years, SINKs can especially benefit from protecting against income loss.

Don’t have disability insurance as part of your employee benefits package? Let’s quote an individual policy! Securely upload your most recent paystub, and complete this questionnaire. I’ll use your stub to project the amount of annual income your disability policy would need to cover. And the questionnaire will help us get reliable quote estimates.

Of course, even if income insurance is part of your benefits package, it might not be enough — especially if you’re a high-income earner. If this sounds like you and you’re questioning your long-term disability coverage, add your employee benefits guide and/or current benefits statement to your upload, and I’ll include it in your analysis.

Speaking of insurance, without children to provide for in the event of a premature death, SINKs and DINKs might not need life insurance. This can narrow the life insurance conversation to, “If you were to pass away unexpectedly, how much would you want to provide to those important to you in addition to the assets they’d be receiving as your beneficiaries?” The answer is a starting point for how much life insurance to buy — and it might well be $0.

Of course, if you’re in the “no kids” camp and your employer provides life insurance to you at no cost, take it! (Insurance planning consultations are coming up in November, but you can grab a time on my calendar anytime to discuss yours.)

That “insurance” piece brings me to another important point.

Planning for Tomorrow

When it comes to insurance, I often hear people with children say that they don’t want to “burden” their kids if they were to require care in the future, like assisted living. For many children, “returning the favor” isn’t a burden when their parents need such assistance. But for SINKs and DINKs, a long-term care plan — whether through a traditional insurance policy or self-insuring by having funds set aside should a need arise — can be an important consideration.

Maybe it’s to maintain independence for as long as possible or to live a certain lifestyle even when not completely independent. Perhaps it’s to ensure that they’ll receive dignified care or to avoid reliance on the Medicaid system. Whatever the reason, those who won’t have a support system in a younger generation later in life may find such a plan crucial. (If you’re thinking, “This sounds like me!” Let me know! I’m happy to work with you to get quotes and illustrate a long-term care policy’s impact on your financial plan.)

Of course, this is important for people with kids, too. Those children may not be equipped to care for their ailing parents — or might not be willing to do so, especially in cases where parent-child relationships are strained.

With long-term care needs tending to fall at the end of one’s financial plan, what happens for SINKs and DINKs after they’re gone?

 

Planning for the Future

That’s where philanthropy as well as estate and legacy planning come in. The philanthropy piece boils down to giving now or giving later, and it brings up options for lifetime and future gifts.

Giving Now

Without the expenses of having children of their own, some SINKs and DINKs find themselves with wealth that they’d like to share with family or friends. For those wanting to give monetary gifts, the 2024 gift tax exclusion is $18,000 per gift recipient for individuals. For married DINKs who elect to split gifts on their tax return, that doubles to $36,000 per gift recipient. If you give more than the exclusion amount to any single recipient, plan to have us add a gift tax return to your income tax filing next spring. The same goes for couples who choose to split gifts.

The perks of lifetime giving include being able to see loved ones enjoy your gifts now and celebrating the journeys they’ll take with them. And don’t forget that you can make unlimited gifts directly to some institutions — like universities and hospitals — to assist others with health care and education-related expenses.

Giving Later

For those who want to give later, planning for that future is key. Deciding where your stuff will go through your last will and testament as well as your beneficiary designations is one thing. And this can be especially important for unmarried DINKs who don’t have a spouse to pass assets to automatically.

Don’t know where to give yet but know that you want to? A donor-advised fund (DAF) can help. The DAF is a “give today, gift tomorrow” vehicle. In other words, you add donation dollars to the fund now and can later determine to which 501(c)(3) charities those gifts will go. Plus, donations to a DAF are tax-deductible, so it’s a win-win! And if funds are left in a DAF when you pass away, your will can dictate to which charities they go.

Estate Planning Considerations

Future givers need to plan not only for the gifts they’d like to give but also for themselves. This future planning also involves outlining later decisions now in case you’re not able to make them down the road. It’s crucial if you wouldn’t want someone to have to make certain decisions on your behalf blindly.

That’s how having a power of attorney (POA) and a living will or health care power of attorney (HPOA) in your estate planning document package can help. A POA allows the person or people you authorize to make financial decisions on your behalf while a HPOA does the same for health care. Both also allow you to provide specific directions and general guidelines in writing so that the person or people you authorize can act in accordance with your wishes.

Whether you’re a SINK or DINK — or neither — we’re here to help! Keep in mind that we can also assist as you plan your gifts to others, whether you’d like to give during your lifetime, through a DAF, or as part of your estate plan.