Financial planning for DINKs

06/28/2024 — Key takeaways:

• DINK (Dual Income, No Kids) clients may be able to retire earlier than their peers with children.
• It costs upwards of $300,000 to raise a child to 18 in this economy—and that’s not including college expenses.
• DINKs may be able to save more money on average, without the expenses associated with raising a child.

Financial professionals are no strangers to tailoring strategies to meet varied client needs. However, an increasingly relevant demographic worth focusing on is DINK couples—Dual Income, No Kids. According to a Pew Research Center Survey, a rising number of U.S. adults who don’t already have children say they are unlikely to ever have any, and their reasons range from just not wanting to, to concerns about climate change.¹

These clients often have unique financial planning requirements, especially when compared to families with children. Understanding the specific needs and opportunities for DINK clients can help you offer more focused and effective advice. Let’s explore why financial planning for childless clients may look different.

The cost of raising children

Raising children is a significant financial commitment. According to the USDA, the most recent data puts the average cost of raising a child from birth to age 18 at approximately $233,610 (excluding college expenses).² This hefty sum incorporates expenses like housing, food, childcare, education, and healthcare. The data where this annual report was published hasn’t been updated since 2017, however, so adjusting for inflation³ that figure is over $300,000. For many households with children, these costs can represent a substantial portion of disposable income. They often necessitate a more conservative and long-term approach to saving and investing. On the other hand, DINK couples don’t face these financial burdens, which can lead to distinct advantages when it comes to wealth accumulation.

Average DINK income

The typical DINK household enjoys the benefit of two incomes but without the financial drain of child-related expenses. When analyzing the Current Population Survey from the United State Census Bureau, Rocket Mortgage found that DINKs earn an average of $138,000 per year, which is almost 7% more than dual-income families with kids.⁴ Knowing this, your DINK clients may differ from clients with children in the following ways:

• Higher savings rate: With fewer financial responsibilities, DINK couples typically save a higher percentage of their income.
• Greater investment opportunities: More disposable income allows for diversified investment portfolios.
• Increased flexibility: Without the need to plan for future child-related costs, DINK couples can often take more risks with their investments, potentially leading to higher returns.

Retirement planning for childless couples

With their higher savings rates and fewer financial responsibilities, DINK couples may have the potential to retire earlier than households with children. Here are several strategies you can discuss with your DINK clients:

• Maximize retirement contributions: Encourage DINK clients to take full advantage of tax-advantaged retirement accounts, such as 401(k) plans and IRAs. Maximizing contributions early can lead to significant growth over time, thanks to compounding.
• Debt management: With higher disposable incomes, DINK couples have the opportunity to aggressively pay down debt, including mortgages and student loans. Reducing or eliminating debt can free up even more resources for retirement savings.
• Diversified investments: Consider guiding your DINK clients toward building a diversified investment portfolio that aligns with their risk tolerance. With fewer constraints, they may be more open to exploring higher-risk, potentially higher-reward investment opportunities.
• Travel and lifestyle goals: Many DINK couples prioritize lifestyle goals like travel, hobbies, and early retirement. Incorporate these aspirations into their financial plan, ensuring they can enjoy their wealth while still committing to securing their financial future.
• Emergency funds and financial security: Despite having higher disposable incomes, it’s crucial for DINK couples to maintain a robust emergency fund and to help build financial security. This financial cushion can protect against unexpected expenses and provide a sense of comfort,
• Retirement options: For DINKs, it may be easier to help them consider where to retire, without having to account for children or grandchildren.

The bottom line

Financial planning for DINK couples offers unique opportunities and requires tailored strategies. Although the reasons your DINK clients don’t have children may vary, generally households with two incomes and no dependents can free up more money for spending, saving, and investing. By understanding the distinct financial landscape of dual-income, no-kids households, you can provide more effective advice, helping these clients achieve their goals—whether it’s early retirement, extensive travel, or simply enjoying a comfortable lifestyle.