Dr. Jay Zigmont: Handling Your Finances When You Don’t Have Kids

Summary

Podcast Summary: The Long View – Episode Featuring Dr. Jay Zygmont on Handling Finances When You Don’t Have Kids

Introduction

In this engaging episode of The Long View, hosts Christine Benz, Amy C. Arnott, and Dan Lefkovitz delve into the unique financial considerations faced by individuals and couples who choose to live child-free. Their guest, Dr. Jay Zygmont, author of The Childfree Guide to Life and Money and founder of Child Free Wealth, brings his expertise as a certified Financial Planner, MBA, and PhD in adult learning to discuss the intricacies of financial planning without the assumption of parenthood.

Why Focus on Child-Free Financial Planning

Dr. Jay Zygmont opens the conversation by explaining his personal motivation for focusing on child-free financial planning. “[...], I started researching this question of like, are my wife and I weird? [...] I didn't even know the term child free existed at the time and come to find out, I found a subreddit of like 1.5 million people that are child free” ([00:36] - [02:46]). He highlights that approximately 25% of the U.S. population is child-free or permanently childless, yet this significant demographic is often overlooked in standard financial planning literature and practices.

Financial Implications of Being Child-Free

The discussion moves to the financial well-being of child-free individuals compared to those with children. Dr. Zygmont clarifies, “there are people who are struggling who have kids and people are struggling who don't have kids” ([03:03]). He notes that while single childless women have the highest average net worth, the difference isn't substantial enough to create a significant financial advantage. Importantly, he reveals that the gender wage gap virtually disappears among child-free couples: “the wage gap between men and women is about $160 a month” ([04:18]).

Legacy and Wealth Transfer

Dr. Zygmont emphasizes that child-free individuals often do not prioritize leaving substantial wealth to the next generation. He explains, “if you're not trying to pass that money to next generation, it changes assumptions in your financial plan” ([06:02]). This shift necessitates a different approach to financial planning, focusing more on personal fulfillment and less on legacy-building.

The Die with Zero Approach

A significant portion of the conversation centers around the “Die with Zero” philosophy, inspired by Bill Perkins' book. Dr. Zygmont explains that for child-free individuals, this approach encourages maximizing life’s experiences by spending money during one’s lifetime instead of saving primarily for estate transfer: “how can I give, live and enjoy my money throughout my life rather than just passing it after I'm gone” ([09:32]).

Social Security and Demographic Shifts

Addressing Social Security, Dr. Zygmont expresses skepticism about relying on it fully: “I’m not going to get Social Security for another, whatever, 25 years” ([23:39]). He links this uncertainty to broader demographic shifts, noting declining fertility rates and population growth challenges that could strain Social Security’s sustainability.

Financial Advice Industry Biases

The episode highlights systemic biases within the financial advice industry against child-free financial planning. Dr. Zygmont shares, “the entire system is based on this constant growth model” ([25:57]). He critiques how traditional advisors prioritize asset growth to increase Assets Under Management (AUM), which may conflict with child-free clients’ goals to deplete their portfolios strategically.

Annuities and Asset Allocation

When discussing asset allocation, Dr. Zygmont suggests that child-free individuals might adopt unconventional strategies, such as going entirely into fixed income or risk-heavy stocks, since their goals differ from traditional growth-focused plans ([16:14]). He also touches upon annuities, recommending a specific fixed index annuity with a long-term care rider that provides predictable income and addresses longevity risk ([28:56]).

Spending Strategies and Overcoming Behavioral Barriers

Dr. Zygmont explores behavioral strategies to help child-free clients manage their spending effectively. He introduces the concept of balancing personal spending with giving: “we set up a goal and said, all right, I want you to spend X amount of money per year. [...] we're also going to give away X amount each year” ([18:19]). This balance helps clients feel justified in their spending while fostering a habit of generosity.

Long-Term Care Planning

A critical topic is long-term care planning, especially since child-free individuals cannot rely on children for support. Dr. Zygmont advocates for early planning, ideally by one’s mid-40s, due to the high costs and limited coverage options available later in life: “[...] you need to have a solution” ([30:39]). He discusses asset thresholds for purchasing long-term care insurance versus self-funding, recommending around half a million dollars set aside for long-term care needs ([33:56]).

Non-Financial Aspects: Happiness and Life Satisfaction

Addressing the emotional well-being of child-free individuals, Dr. Zygmont shares his findings that 94% of child-free people report being happy, a significantly higher rate compared to the general population ([38:41]). This counters common stereotypes and underscores that choosing a child-free lifestyle can lead to substantial life satisfaction.

Child-Free Midlife Crisis

The concept of a “child-free midlife crisis” is discussed, where individuals reach their financial goals and then question their purpose. Dr. Zygmont advises focusing on personal impact and legacy: “what is your legacy?” ([39:38]). He encourages clients to define meaningful contributions beyond financial success, helping them navigate this existential phase.

Caring for Elderly Parents: Boundary Setting

Dr. Zygmont emphasizes the importance of setting clear boundaries when child-free individuals care for elderly parents. He warns against becoming financially and emotionally overextended: “[...] it's a challenge to get people to make decisions a lot earlier” ([42:37]). Establishing limits helps prevent caregiver burnout and ensures sustainable support for aging parents.

Gardener and the Rose Concept for Couples

Introducing the “Gardener and the Rose” metaphor, Dr. Zygmont illustrates how child-free couples can balance personal growth and mutual support. Each partner alternates between roles, allowing one to pursue personal ambitions while the other provides support, fostering a harmonious and equitable relationship: “[...] you take turns between who's providing support and who is growing” ([45:39]).

Estate Planning for Child-Free Individuals

Effective estate planning is crucial for child-free individuals to ensure their wishes are honored. Dr. Zygmont highlights the need for appointing trusted executors and medical power of attorneys, noting that without children, many rely on professional fiduciaries or may face their estates being assigned to the state: “[...] 70% of people do not have a will” ([51:00]). He announces the upcoming launch of the “Child Free Trust,” a product designed to meet these specific needs.

Conclusion

The episode concludes with Dr. Zygmont’s congratulations and the hosts' encouragement for listeners to engage further with the topics discussed. This comprehensive discussion illuminates the distinct financial planning strategies required by child-free individuals, emphasizing tailored approaches that align with their unique life choices and ensuring financial security and personal fulfillment.

Notable Quotes

• Dr. Jay Zygmont on discovering the child-free community: “I found a subreddit of like 1.5 million people that are child free” ([02:46]).
• On the gender wage gap: “the wage gap between men and women is about $160 a month” ([04:18]).
• Discussing the Die with Zero approach: “[...] how can I give, live and enjoy my money throughout my life rather than just passing it after I'm gone” ([09:32]).
• On Social Security concerns: “I’m not going to get Social Security for another, whatever, 25 years” ([23:39]).
• Highlighting financial planning biases: “[...] the entire system is based on this constant growth model” ([25:57]).
• On happiness among child-free individuals: “94% said they were happy” ([38:41]).

Key Takeaways

• Tailored Financial Planning: Child-free individuals require specialized financial strategies that differ from traditional models focused on child-rearing and legacy transfer.

• Gender Wage Gap Mitigation: Being child-free can significantly reduce the gender wage gap, fostering greater financial equality between men and women.

• Legacy Reimagined: Without children, legacy planning shifts towards personal impact and charitable giving during one’s lifetime.

• Behavioral Adjustments: Encouraging balanced spending and giving can help child-free individuals enjoy their wealth without financial anxiety.

• Long-Term Care: Early and strategic planning for long-term care is essential for child-free individuals to ensure autonomy and financial stability in later years.

• Estate Planning: Appointing trusted executors and establishing clear estate plans are critical to safeguard one’s wishes and prevent legal complications.

This episode serves as a valuable resource for child-free individuals seeking to navigate the complex landscape of financial planning, offering practical advice and innovative strategies to achieve financial independence and personal fulfillment.

Transcript

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[Christine Benz]

Hi and welcome to the Longview. I'm Christine Benz, Director of Personal Finance and Retirement Planning for Morningstar.

[Amy Arnott]

And I'm Amy Arnott, Portfolio Strategist for Morningstar.

[Christine Benz]

Our guest on the podcast today is Dr. Jay Zygmot. He's the author of a new book called the childfree Guide to Life and Money, and he's also the founder and CEO of Child Free Wealth, a financial planning firm dedicated to helping people without kids. Dr. J is a certified Financial Planner and he also has his MBA as well as his PhD in adult learning from the University of Connecticut. He hosts the Child Free wealth podcast and he previously published another book called Portraits of child free wealth. Dr. Jay, welcome to the Longview.

[Dr. Jay Zygmont]

Thanks for having me.

[Christine Benz]

Well, thanks for being on so your new book is called the Child Free Guide to Life and Money. What prompted you to write a book that was geared toward people without kids and focus on them for your practice as well?

[Dr. Jay Zygmont]

Yeah, so my wife and I are child free and when I was studying to become a cfp, what was surprising to me is there was never once mentioned any of the literature of the concept of living a life without kids. And I started kind of looking at this and I'm a researcher by nature and I started researching this question of like, are my wife and I weird? Or just like how weird are we? We're pretty weird. We're two PhDs. We'll sit around at dinner talking about research studies like we're weird. How weird are we for being child free, living the life we want to live, where do we want to go? And I didn't even know the term child free existed at the time and come to find out, I found a subreddit of like 1.5 million people that are child free. So like there's a bunch of us out there. And as I started looking into the topic more and more, I've now spent years researching this Come to find out, 25% of the US are child free or permanently childless. So it's a huge population, yet it's still a group that financial planning overlooks. I mean, if you look at the standard life plan, or we call it the standard life script, you look at the stages of life that are built into the planning, they all assume you either have kids or you will have kids. And my worry, and I think I found this multiple times, is that that results in bad advice.

[Amy Arnott]

So what about the financial wherewithal of people who don't have children? Are they better off on average than people with kids because they don't have all the costs associated with raising kids and college tuition, things like that.

[Dr. Jay Zygmont]

So I think there's like this assumption that like, if you're child free, like a check falls from the sky and makes you rich, and that's just not true. Like, you know, there are people who are struggling who have kids and people are struggling who don't have kids. So income disparities still exist. If you look at the data, the US Census found that if you look at individuals, the group with the highest net worth on average were single childless women. But it was only by a couple thousand dollars over the next group, which is fathers. So, like, it's not enough to make a difference. What is interesting is the gender wage gap nearly disappears in child free couples. So Pew Research put out a study earlier this year and they looked at median monthly income and they found that the wage gap between men and women is about 1800 bucks in parents. In child free people, it's about $160 a month, which statistically is essentially gone. And that's something you do see. I think part of the reason why you don't see a huge net worth difference is it's not a priority for child free people. You know, they probably could make more money if they wanted to, or, you know, they have to pay for diapers and all that fun stuff, but it's not a goal.

[Christine Benz]

So I want to follow up on that lack of wage disparity because it does suggest that the caregiving obligations, which often fall to women in many households that have children, it suggests that that does explain kind of this gender, at least a big share of the gender wage gap that we see. Is that taking things too far, do you think?

[Dr. Jay Zygmont]

I think you're on the right path. I had somebody else call it the motherhood penalty.

[Amy Arnott]

Yeah.

[Dr. Jay Zygmont]

And that's pretty cool. I mean, pretty spot on. And I think what's interesting is if you look at Kind of the bigger picture, bigger economics. As women's education has gone up, as reproductive rights have been widely accepted in different areas, you see women making different choices. And it used to be the old school and I kind of don't like this term, but it used to be like, oh, you would choose to be a career woman instead of being a mom. It's not a choice like people, you know, for some people it is, some people it isn't. But you can see different paths and you do see that Maybe it is because of the expectations, the caregiving, all the other things, the career stop, all of that. But it's something that's not really talked about much.

[Amy Arnott]

So I think one great thing about the book is I think a lot of the information is relevant to people in general. People, you know, people who have kids as well as people who don't have kids. I do have kids, although they're in their 20s, so I'm an empty nester right now. But you mentioned that people without kids are different enough from people with kids that they have some specific financial planning needs. What are the main areas that you would highlight there?

[Dr. Jay Zygmont]

So if you look at the core assumptions, I tend to start the end of life and work backwards as a whole. Most child free folks don't have a priority on how much money they give to the next generation. You know, the way my wife and I say it is our nephews get what's left over. If they get ten thousand or a hundred thousand, that's fine, but if they get a million dollars, we made a mistake. And it's kind of something akin to a die with zero approach. And if you're not trying to pass that money to next generation, it changes assumptions in your financial plan. And then when we add on that a vast majority of childfree folks aren't looking at like the standard retirement structure where they're looking at more of what we call file financial live early, kind of a dial back on work rather than a complete cutout. If you're not going to retire and you're not going to pass on money next generation, a lot of assumptions change in your financial plan. Even things like life insurance has a very small purpose for child free folks. Nearly zero usage for people that are what we call soloists, single with no kids. You know, things like long term care, we know we have to plan for. Although the truth is everybody should do that. Like it starts changing all these assumptions and the end result is for a child free person, you actually have to do life planning first rather than just financial planning. Because there's so many options that if you don't create a life plan first, you may get to a goal that is not yours. The bonus of being a parent is there's kind of like a culturally accepted standard life script. You go to school, you get married, you have kids, you work 25 years, pass the money, next generation, all this stuff. When you're living a life of child free wealth, the way we look at it is you have time, money and freedom to do what you enjoy. But it's almost too much. It's like, what do we do if we can live anywhere? You know, what, what do we do with our jobs? What do we do with our life? And it's one of those things where if you follow the standard financial advice, you might get to your goal, but it might not be your goal, it might just be the one that's set for you.

[Christine Benz]

I want to follow up on the idea that people without kids maybe aren't as attuned to passing money to the next generation. That seems like a pretty big generalization. I'm sure you have clients who, you don't have kids who still have that as a priority, or maybe you don't. I'd be curious to get your take on that.

[Dr. Jay Zygmont]

So, interesting side note, if you want to look at a group that understands child free people and understands how to market to them, it's a lot of the charitable organizations. Philanthropic organizations because they found that child free people on average donate more. And you'll see that a lot in people's estate plan. But the challenge is if you're going to give money, you're better off giving that throughout your life rather than at the end of life, you know. Yes, my wife and I, we care about our nephews. We want to help them, but we're better off helping them now because if we help, you know, if we give money, when we die, we're going to be 90 something. Hopefully they're 60 something. They're not going to need the money now. So what it is is it's a shift in perspective where I'll ask clients, you know, do you have a priority in how much you leave to the next generation? They will say no. Now I'll give my leftover to like I had somebody last night. I'll give it to my animal charity or whatever else it is. Great. Or I'll give it to my niece and nephews, whatever it is. But it's not a goal to leave a certain amount or a large amount.

[Amy Arnott]

So I think you mentioned Bill Perkins Book Earlier, Die with a Zero. Can you talk about what the book's title means to you and why you think that's good advice for people without kids?

[Dr. Jay Zygmont]

Yeah, I've actually started avoiding the title because some people think Die with Zero literally means, like, you're gonna bounce your last check. And you know, we're not gonna do that. Like, we have a safety net for it. You know, like, hey, I would love to know exactly the day I'm dying, that I can do the math backwards, but it's not gonna happen. But when Bill wrote the book, what's interesting in there, he has a whole big chapters on kids and all of that, but for child free folks, it outlines the structure of how do I use my money to maximize my health, my wealth, my time across my life? Which really is an approach that our childfree clients follow. The challenge is it changes a lot of core assumptions in financial planning. You know, when you look at financial planning, you know, Monte Carlo assumptions are all based on the likelihood that you run out of money. If you got 100% Monte Carlo success, that's technically 100% failure at dying with zero. You know, like, you're not going to run out of money. Well, it sounds good to not run out of money, but I went through a client's file last night and we did all their Monte Carlo and we're like, okay, this simulation and nobody, it's always a simulation. So you never know for sure. Says you're going to die with a hundred million dollars. So you have a hundred million dollar problem. And they kind of laughed at me. But I'm like, no, if your goal is not to leave a whole lot of money to your estate or whatever else it is you are saving money and investing it in it doesn't match your goals. And it's that shift in mindset, that's what that Die with Zero book does. It kind of gets people to look at how can I give, live and enjoy my money throughout my life rather than just passing it after I'm gone.

[Christine Benz]

You've talked about how your nephews will receive any amounts that are left over when you and your wife are gone. And you wrote in the book that if it's a million dollars or more, you failed somewhere along the line. Can you expound on that and talk about what you mean by that?

[Dr. Jay Zygmont]

Absolutely. So I think when you're looking at, you want to help people in life, whatever that is for my nephews, you know, they're going to be better off if we help them earlier in life than when we're dead. You know, if we're giving them money and we're 90 and they're getting when they're 60, there's less of a use of it. If you think about your life, you could have used a little hand up earlier in life. Whether that was in your 20s or whatever it is, you know, whether it's college or whatever it may be, you're better off helping them then. That's why we have 529 plans for our nephews. That's why we have ways we want to give money to them. And it's been interesting talking to clients about it because they all have different approaches. And one of my favorite, my client had an account, it was called get the Babies to Love Me fund, which I just love that name. But really what they were doing was saying, how do we make an impact in our nephews and nieces? And they're like, hey, this fund is specifically not for college, but it's for like their first car. If they want to start a business, they want a backpack across Europe. There are ways you can make an impact earlier in your life that will set them up rather than just keeping it in your account and oh, you'll get it later.

[Amy Arnott]

Yeah. We've heard people talk about this concept of giving with a warm hand instead of a cold one. And I think you're right that often a monetary gift at the right time when someone is younger can have a bigger impact than it might if, you know, they don't receive money until they're in their 50s or 60s.

[Dr. Jay Zygmont]

Absolutely. And besides the fact you get to be part of it, then, you know, so I've got folks that are, you know, giving to their family and helping them, you know, figure out finances early on. You know, they're actually like paying for people to get with a financial planner and, and get a good foundation set so they can have money later that has a huge impact. And you know what, it's a fun thing to do. Like it's fun to give money away to charities, the people that matter to you and see the impact.

[Christine Benz]

So in addition to that, do you think that there's potentially kind of a self interested reason to give to your loved ones during your lifetime? Like if you're a person without children and you're giving to, say, your nieces and nephews, does that potentially make them a little more likely to help you later in life or do you advise against that sort of transactional approach to helping young loved ones?

[Dr. Jay Zygmont]

So one of the hardest decisions for child free folks Is who's going to make decisions for you at the end of life, like, who's going to take care of you when you're older. And the problem is if you think, hey, if I give some money to my nephew, they'll take care of me. The data does not back that up. So I had somebody reach out to me, and she sent this email. She said, hey, I'm 71. She was in Washington. She's single. She's like, I got nobody that I can rely on to make decisions for me, to help me out. She's like, I got one nephew, he's across the country. Maybe if I give him my estate, maybe he'll take care of me, but I don't really know him. And my response to her was that is setting up an opportunity for elder abuse. Because if your nephew's gonna get your money when you're left over, if they're making the choice which home to put you in, unfortunately, they may choose to put you in the cheaper home and get the rest of the money. I mean, like, I hate to be that jaded, but if you look at the stats on elder abuse, it's rampant across the country and saying, hey, maybe if I give them more money, they'll take care of me. Unfortunately, the data just doesn't back that up.

[Christine Benz]

Well, even if it's not literally like, take care of me, it's more sort of I want to keep them in my life and make sure that they're interested in how I'm doing those kinds of things. Like, even if you're not expecting them to be on the ground being caregivers or anything like that.

[Dr. Jay Zygmont]

Yeah, I think that's possible. But I think the flip side of that is, do you become an atm? You know, like, do they come to you just for the money and they're friendly with you just for the money? You know, my wife and I have adopted that we don't give anybody money, you know, as far as helping them out, but we will buy them services if they need it. We will. You know, I'll buy the groceries if I have to, or whatever else it is, because I don't want to build a habit where, oh, I get to know them because, you know, they're here begging for money. So you have to find that balancing act. I think if it is transactional, that way, I'm not sure the balance is there.

[Amy Arnott]

So I'm curious about kind of the investment side of things. Do you think the asset allocation of a portfolio for someone who is following the die with Zero approach should look different than it would for someone who wants to leave a legacy.

[Dr. Jay Zygmont]

Well, it's interesting. So when we look at a DAI with zero plan, or winding down your wealth as we call it, we set a safety net. So the safety net is you have a plan for long term care, you put off Social Security to 70, and you have a little cash cushion. A cash cushion is usually like one or two years of expenses. And then we optimize for how much money can you spend each year. And it's actually a minimum amount of spend rather than a maximum. And you can do two different things with your investments. If you've truly got a die with zero plan, you could go 100% into, you know, fixed income and be okay because it's a predictable amount. You know, you could just run a ladder and do it. On the flip side, you could also go nearly 100% into stock and just take a chance. You swing for the fences. Because the goal, you've got that safety net there. The goal isn't to pass down a certain amount of money. You can go either way. And both of those seem weird. You know, we're talking to somebody in their 60s and 70s, like, hey, you could be 100% stock or you could be 100% fixed income, whichever works for their structure. And when you walk them through, like, well, but the general rule says I need to have and blah, blah, blah. And that's where those general rules don't fit. And it's more a question of what type of life do you want to live and how do we make sure you have, you know, you're spending enough to bring down your net worth? Which is a challenge. I mean, we spend more time with our clients talking about spending money and saving money, and sometimes it actually helps them to spend more money if they're on a fixed income investment. You know, they just run it. Others, hey, they have big dreams and they want to take a chance. Both work.

[Christine Benz]

Wanted to follow up on that spending point because it seems like that's a recurrent theme with a lot of financial advisors we talk to where they say that getting their clients to switch on the spending after a lifetime of saving is a really tricky, tricky thing. I'm wondering if you can share any techniques that you have. And it seems like they would probably be relevant to people with kids, without kids to get them to spend an appropriate amount given whatever their goals are.

[Dr. Jay Zygmont]

Yeah, so my PhD is in adult learning and I come out of the kind of the behavioral side and I probably spend more time with My clients working on that behavioral side, the money mindsets than I do on the finances. Because our goal, the way we look at it, we're always trying to make your finance is simple, so your life can be amazing. So we're not doing anything fancy on the investments, but we're trying to get them to actually enjoy their money. And I think the hard part is the people that have been great savers, like we have to unprogram 40 or 50 years or whatever it is of experience. You know, we run into it so often. We call it the blueberry problem, which is the people that have the money they need to do whatever they want. But they're buying the frozen blueberries because they're a dollar cheaper than the fresh blueberries. I'm like, just buy the good blueberries, you're fine. I have a client with tens of millions of dollars still cutting coupons. I'm like, you don't have to do that anymore. But the hard part is that's not where their brain is. So great example of this. What we'll do is we will combine whatever their priorities are. Their goals are for spending with a giving option. So, for example, when you spend money, often there's guilt around it. So I have a client, we set up a goal and said, all right, I want you to spend X amount of money per year. In their case, like $100,000 on travel. But we're also going to give away $100,000 each year. And what ends up happening is because they're giving and it's not always the charity, sometimes the family or whatever else it is they're giving they feel okay about. And that makes it okay also for them to spend on themselves. Now, I will tell you, at the end of the year, I do ask them, which did you get more out of, the travel or the giving? And it's usually actually the giving they got more out of, but it changes the habits. You know, I had a client the other day, like, you'd be proud of us. Last year we spent double what we did the year before. I'm like, yes, and we're celebrating it.

[Amy Arnott]

You also have a section in the book on the 4% guideline for retirement spending that, you know, is this well known rule of thumb that so many people have latched onto. But you argue that that really doesn't hold up for people without kids. Can you talk a little bit more about that?

[Dr. Jay Zygmont]

Yeah. So the 4% rule was based around the concept of, once again, I don't want to run out of money. And you go into the data and I don't know, depending on the week, you know, you've got the different numbers was 3.7% or 4 or 5 or whatever else they are, they are all very rough back of the napkin math that do not reflect the lifestyle you want to live. And they have assumptions in there that don't match. So that's really all based on essentially Monte Carlo simulations. If I do a Monte Carlo simulation for my clients, I'm trying to get to like 50% success. Half the time they run money, half the time they don't. And it gives you a better idea of what they can actually spend. The 4% rule is great for like, kind of like just directional, hey, I need about this amount of money. But what we find with our clients, because they're not retiring in the classic sense, they're going to work a little bit, they're going to do some things, they actually save too much by the 4% rule. And if they've been kind of deep in the fire literature, deep in kind of like, I've got to hit this number, what ends up happening is they focus so much on the number, they miss their life on the way by. And it's one of those things you have to reprogram. And if you're going to die with zero, if you're going to go down that path, you really need to be doing ongoing financial planning, not one off. Let me grab a number and play with it. And I think that's a different mindset than just saying, here's a general back of the napkin math and it should.

[Christine Benz]

Make me through to follow up on that. So you mentioned that 50% probability as a starting point. And then is the idea when you work with clients, you're revisiting that on an ongoing basis based on what their spending has been like, how their portfolio has behaved and so forth. And you kind of recheck that probability of success.

[Dr. Jay Zygmont]

Yeah, we're more on the retirement guardrails type approach, but it's really around, you know, we have to bend that net worth curve. So there's just those assumptions that have to change to the point where we can look at and say, okay, over the last two years, this has been your spending, this has been your growth, your net worth is still going up. We need to optimize for spending more. And since you're doing it regularly, I mean, you know, we, we got, we have an ongoing financial planning process. That's how we do this. What happens is you can make tweaks each year based on their goals, based on the market and based on where they're trying to go. I think the challenge is if you try to, like, guess it up front, you're strong. Like, I mean, we all know that, like, any prediction we know is wrong. But if we're doing an ongoing financial planning and life planning process, these adjustments each year, you can get to the impact you want to make and get to enjoy your money.

[Amy Arnott]

Another interesting thing that you wrote about in the book is you mentioned you're not counting on Social Security in your own financial plan. Instead, I think you are building in a benefit of 80% of what you would be eligible for. Do you think it's inevitable that Social Security benefits will have to eventually decline or start at a later age?

[Dr. Jay Zygmont]

Yeah. So I'm a Gen Xer, and for Gen Xers and younger, I don't know that you can reliably count on having your full amount coming to you. We do use the number 70%, kind of cut back a little bit or consider it more of a bonus. And I think the challenge is there's systemic problems with Social Security. So I was on a podcast and somebody said it this way, like, well, you child free people are not having kids, so we're not going to have the constant growth and Social Security is going to fall apart. And I'm like, oh, hold up, like, Social Security was messed up before we got there. But if you look at the population growth and fertility rates, they're dropping. There was just an article came out this week in Alabama where they're not even keeping up with their population loss from death. Their population's shrinking because of fertility rates and people choosing not to have kids. And I think what you find is if you look across the world, the number of people choosing not to have kids has gone up. And if you look at countries like Japan, Japan's about one third of folks are not married, they're not having kids, they're child free. Well, if a third of folks are going to be child free, your population will shift. And systems that are based on constant growth like Social Security are going to need a complete revamp. And that's the problem I'm looking at and saying, okay, I'm not going to get Social Security for another, whatever, 25 years. There's a huge demographic shift in those decades.

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[Christine Benz]

You note in the book that the investment advice industry tends to be biased against that general idea of depleting or mostly depleting the portfolio before death. Can you talk about that and why you like different business models for financial advice for people who are aiming to kind of go down this path that you suggest?

[Dr. Jay Zygmont]

Sure. So I was talking to a major broker and they were talking through this child free concept. Try to understand. And they told me it this way. They said, look, this die with zero thing, this approach you're doing with child free people, they said I don't think I can do that and still be a fiduciary. And I was kind of surprised by that. I said, wait a minute, if this is your client's goals, why can't you do it? And we started peeling it apart. The issue was their entire system is based on this constant growth model. So if you take the 1% AUM world, the advisor is trying to make your numbers go up and you only see ads like when you do better, we do better. And what that's implying is your net worth goes up, we make more money, we're on the same page. The problem is that can be a conflict of interest for child free folks because if they truly want to die with zero, are you getting conflict free advice that says, yep, I'm good with this, Spend your money, enjoy it, invest in your life differently. If the advisor's compensation is connected to it, it's why we as a firm chose to do a flat rate. We charge the same amount no matter what you got for investments. You know, we are particularly looking at saying, all right, we want to be able to serve the people that we do, which are child free folks. So how do we make sure our model fits them? And as you start pulling it apart, you start seeing, you know, things like life insurance, child free folks are being pushed life insurance, it's not a priority for them, but they're being pushed it because of compensation models. You know, these are the biases that are in the system or the conflicts that become big and it gets so big that we encourage child free people whether you work with us or not. That's, you know, that's up to you. But always to ask your advisor, how is your financial plan different because you're child free. And what we found is when people do this, the first answer they'll get, which I don't agree with, is, well, you'll change your mind. Like, let's be real, you know, we're talking about I got child free people that got sterilized at 20. You know, they're not changing their mind. That's just a dismissive comment. Or what they'll get is, oh, it's not different. That's not true. You know, I'm actually okay if the advisor says I don't know how it's different, let's figure it out. But there's all of these assumptions and the problem is even it's built into the software. So for example, the financial planning software we have, we, we worked with them for a while now. It allows people to be in a couple that aren't married because one third of child free folks will never marry. But yet all the financial planning software, you put a couple in there automatically assumes they're married. It's these biases that are systemic that we don't see that we have to watch out for.

[Amy Arnott]

So what about annuities? Do you think annuities make more sense for someone who is, doesn't have children or who isn't concerned about leaving a legacy?

[Dr. Jay Zygmont]

Yeah. So I found one annuity that I'm okay with. And now mind you, I'm a little skeptical of annuities to start. But what I found is there is an annuity product. It's a fixed index annuity that has a long term care rider. They call it a health multiplier. But actually what it does is last five years of your life, it doubles the amount you get out for those five years. It's a way to take care of long term care. And the bonus is you have a predictable amount of income each year for life. What I found is that works for the people that are kind of the nervous Nellies, they're a little worried about the market. What if this plan doesn't work? All of that, if I put them on that annuity side, they know they get a new check every month or every quarter or whatever it is. It actually frees them up to do a little more spending. Now, is it the best financial decision from a math equation? Maybe not, but it does free them up. It also works well for, you know, the folks that are, we call them soloists, the single folks. You have a guaranteed income through life. You don't have to worry about longevity risk. You have a long term care solution that works. The challenge is always with annuities, understanding the fees, the structures, you know what's going into it. And that's where it becomes a challenge.

[Christine Benz]

You referenced long term care, so I want to stick with that. You've got a really great section in the book about creating a long term care plan. And with your clients you think it's important to have that long term care plan in place by their mid-40s. I'm curious, like when clients are that young, is it difficult to get them to care about long term care or you know, how do you have that conversation?

[Dr. Jay Zygmont]

So I'm kind of laughing a little bit because turns out you can't get a long term care quote until you're about 30. I actually had a client at 29, I had to wait a year to get her a quote. Like I've got clients worried about it much, much younger. And part of that is because we get this question all the time, well, who's going to take care of you when you're older? And I have a love hate thing with this question. What I love is it gives me an opportunity to talk about the concept. But what I hate is there's a lot of assumptions in there. The assumptions that if you have kids, they'll take care of you. And we don't have those assumptions as child free folks. And the data is very clear. If you look at the US Census, looked at adults over 55 who are childless, they found that 2.5% of them got any financial support from their family. So I mean like that's nearly nothing. This interesting thing is in the same group, adults over 55 in the U.S. they looked at parents and they found that 1.5% got any financial support from their family. So the assumption that like your kids are going to take care of you for long term care, it turns out the data says no. The difference for child free people is we know we have to do it. And the mid-40s range is in there for two reasons. One, it kind of gives people kind of like you don't have to worry about them right this second yet. But also a good time to buy long term care insurance if you're going to do it. And mid-40s was a math equation of how long do I pay for a premium and what are the costs based on age and health. See the thing about long term care insurance and we recommend standalone long term care insurance is your health and your parents health impacts your cost. If Your parents have cognitive decline, dementia, Alzheimer's. If they both have it, you probably can't even get a policy. If one of them has it, you're either going to get less coverage or it's going to double in price. So it's not only your age that matters, it's your parents. And what happens is when I show people what it really costs for long term care, which the number right now is like $115,000 a year for a skilled nursing facility, men will spend 2.2 years, women 3.7. It's a huge number. The answer is you have to have a solution. Medicare doesn't pay for it. That's always the thing. I got to remind people, Medicare doesn't pay for it. Medicaid only covers you once you've run out of money. You need to have a solution. If you wait until your 60s or 70s to figure out a solution, you may have even spent through any money you would have self insured or the cost for that insurance has now gone up so much that it's cost prohibitive. And that's why we're trying to get people to make decisions a lot earlier. I will tell you it is a challenge to get people to put up a couple hundred thousand dollars for an insurance policy for long term care. But the amount of fear that is there around who's going to take care of me when we're older gets over it pretty quickly.

[Amy Arnott]

You also have a discussion in the book about asset levels that point toward whether it makes sense to buy long term care insurance versus self funding or relying on government resources. Can you talk a little bit more about where those kind of asset or wealth breakpoints might be for the different approaches to long term care?

[Dr. Jay Zygmont]

Yeah, and you'll find these numbers all over the place a little bit. And I've been playing with it a lot and what I tend to say for my clients is if you have less than half a million dollars of assets or more than 3 million, don't look at long term care insurance. But it's for different reasons. If you have less than half million dollars in net worth, chances are you're not going to be able to afford long term care insurance and you're going to end up on a Medicaid path. If on the other hand you have more than 3 million, you may be able to insure out of pocket. The challenge is in that middle range. If you don't have a plan for long term care, either money set aside or insurance, you may be like either holding yourself back from spending Money or spending too much, where you've lost that safety net around long term care. Now those numbers are really, really rough because it depends on you, your health, your family's health. It's a big issue because if you're going to self insure today, if you're a couple self insuring today, I'll usually say put about a half million dollars aside, invest it appropriately and that's your long term care fund. The challenge is if you're single, particularly single women, it's still put aside about half a million dollars because in a couple, usually one person will take care of the other person for a while, keeps them out of long term care for a little bit. But if you're single, you don't have that backup. So we're talking about in either case putting aside half a million dollars. So people that can afford to put half a million dollars aside for just in case really have to have a high net worth. You know, some people say 2 million, some people say 3 million. But like it takes millions.

[Christine Benz]

I'm curious, for clients who are thinking through long term care, do you talk about like the type of care that they might receive and do you discourage them against aging in place, like staying in their getting care, coming in that way, or do you not really get into that aspect of it?

[Dr. Jay Zygmont]

So all of the standalone long term care policies that we use cover in home assisted living or skilled nursing. So all the entire list. I think the aging at home is okay, but the real issue is aging in the right place, not aging in place being the, you know, whichever house you're in. You know, if you're in a house and you got two flights of stairs to walk up, it's not aging compatible. What we're talking to clients about is picking the path they want to go on. So for example, we're big fans of CCRCS continuing care retirement communities where you have a 55 and older apartment complex and you have assisted living and a skilled nursing all is part of it. You can actually buy it all as a package. You can work through it and have a predictable amount that you owe that works. But it depends on what you want your life to look like. I'm also a big fan right now of there's some elderly apartment complexes and these are like high end, really nice luxury place. I mean like they have concierge, they have dining, you know, like the chef's like a Michelin star chef. I mean really nice places. And what they found is if they go into one of those apartments and that apartment includes Housekeeping and food and transportation, all that. The amount of need to leave for care is very low. Their number is 5%. We'll have to see how that data comes out. But can we build a structure where you can age in the right place and make that work? The bonus is those standalone long term care policies will cover the healthcare at any of those levels.

[Amy Arnott]

Yeah.

[Christine Benz]

The reason I asked about aging in place, Dr. J, is that it seems like there is a lot of oversight required to help older adults age in place in their homes that, you know, in addition to the caregivers, there's just a lot of household management that needs to go on that if there isn't that trusted adult child nearby, it seems like it could be very difficult to pull off. Right.

[Dr. Jay Zygmont]

Yeah. And we're big fans of aging care managers to help with that. So you can hire people, they're usually, you know, they're usually social workers or nurses, some of those things where they are skilled in this and they know how to bring in the right team of experts to help you, how to make sure you're getting the best most out of your benefits, what care you do need. There are resources that can help you age well. I think the other thing we've seen some folks are trying to approach like the golden girl setup. You know, we all live together, we'll support each other. That works great, except for the last person or the one left because they don't have any care. I mean, there's ways to work around it, but the difference is we need to have a definite plan for it.

[Amy Arnott]

We also wanted to talk about some of the non financial aspects related to the book. What did the data say about the overall, you know, happiness and life satisfaction for people who don't have children?

[Dr. Jay Zygmont]

Yeah. So we did a study on this. We were looking at why people choose to be child free. We look at their finances and we asked them, are you happy? Just kind of like an open question. Let's have this discussion. 94% said they were happy. Now if you look at that number and you say in the general U.S. what percentage of people are happy with their life? It's less than half at most times. So we're talking about a huge shift. And for the people that did not say they were happy, it was interesting because they even put notes like, hey, it's not that I'm unhappy because I'm child free. I have medical issues, I have other issues that are coming across. But we're seeing that being child free does not necessarily make you rich, but it may make you happy. And that's a shift.

[Christine Benz]

In the book, you discuss what you call the child free midlife crisis. I'm curious, can you talk about what that is and what steps you would urge people to take to get themselves through it?

[Dr. Jay Zygmont]

Yeah. So child free people kind of. I see this a lot Even earlier, like mid-30s, mid-40s, they hit this point where they hit their personal, professional financial goals. And then they're like, now what? You know, I hit it myself around that age. And when you hit it, you're like, what's the point? What are you going to do with your life? Am I just going to keep working? Am I going to keep just doing what I've always done? I'm going to keep moving up the ladders. A lot of questions. And the problem is we're really diving into issues that are kind of like self actualization, like, what's the point? You know, what, why am I doing this? And what you find is when people dive into that, they get to a point where, like, why am I continuing my career the way it is? For example, you're like, oh, I've moved up the ladder, I've gone there, I've got some opportunities, like, but I hate my job. I'm like, okay, cool, let's quit it. You know, like. And what we'll do is with our clients is we will shift them and ask the question of, well, what is the impact you want to make with the next 40 years of your life or whatever it may be. And it's interesting because when you ask child free people about impact, we know we're not going to leave a genetic legacy. You know, that's just a different thing. So what is our legacy? And I'll ask clients, what's the second line of your obituary say? So the first line is like, Jay died at this age, at this location. Normally they'll say like, father of three leaves behind Jack, Joe and John. That's not going to be our line. And when I ask clients, hey, what do you want that line to be? It takes some reflection. We have to work on it. But they come up with amazing answers. So I had somebody say to me, I want to have that best garden in the neighborhood. She says, because I've had these gardens and everybody stops, takes a look, smells the flowers, sees the butterflies, and I can see the impact on the community. Great, well, let's shift your money, your time and effort towards that impact. I've had others, you know, hey, you know, I want to have an impact on my family. I want to have an impact on my charities, whatever it may be. It's not always about money, but if you do that, you can get past this child free midlife crisis, because it's a question of what is your purpose. You know, there's a great book that just came out recently, Jordan Grumman's book on the purpose code. It's a great tool to dive into it. Those are the tough questions that we as child free people are answering much earlier that often parents don't answer until kind of the empty nest phase.

[Amy Arnott]

So another thing that can often happen in midlife is people without kids are often called upon to care for their elderly parents. And you write about the importance of setting some boundaries to make sure that you don't get too sucked into all of these obligations. Can you share some examples of boundary settings? And it sounds like you've had your own personal experiences with this, with dealing with issues that have come up with your mother.

[Dr. Jay Zygmont]

Yeah, I think the hard part is for child free people, we get this, we call it the financial bingo, which is you don't have kids so you can take care of mom or fill in the blank of whoever the family member is. And it's particularly an issue for people that are single and no kids, because for the people that are single with no kids, it's like, oh, you don't have kids. You can move in with mom or she can move in with you. Now I'm picking on Mom. It could be dad, could be whatever, but. But the challenge is that is not necessarily what you want with your life. So we have a program we called eight no Baby Steps. You may have heard of the seven Baby Steps. That's the Ramsey program. We have our own no Baby Steps. And step seven is what is your plan for mom and dad or your parents or whatever else it is? Because what we found is your parents planning or lack thereof has more of an impact on your financial plan than your own choices. So I've been in the caregiver role in multiple different ways. My mom's been disabled most of my life since I was about 16. And when you're doing that, it takes a toll, whether it's on you personally or financially. Do you have to change your job, whatever else it is? And the challenge is if you don't set boundaries up front, there can just be expectations. So for example, my wife and I have set a boundary that nobody lives with us just kind of. I know that's not going to be good for us. I know that's not going to be Good for our relationship. We don't do that, but we can support in other ways. Some people are okay with them living you Well, I think the challenge is if you don't set a boundary. Mom falls, breaks her hip. Now she moves in for recovery. Well, six months later she's doing better. And you're like, mom, are you ever leaving? Which sounds a little harsh, but like, you know, I got a life here too. And there becomes a balancing act. And some people are saying, well, I'm going to pay for my parents long term care. Well, I had a couple and between the two of me had three living parents. They said, we would like to pay for our parents long term care. I said, okay, we did the math. I said, it's going to be about $750,000. And they were like, whoa, whoa, whoa. We didn't mean we're giving like three quarters of a million dollars. I'm like, well, that's the number. And in their case, what we ended up doing is they're putting aside a certain amount of money each year towards a parent fund. And when that money is used up, that's the end of it. And it allows them to know they did make the commitment, they did help out, they did make a difference. But there is a limit. And I think what happens is the earlier you have this conversation, you can talk to your parents, say what is their plan? What is their structure? What can you do? What will you do? You can have a good relationship. If on the other hand, it's just expected that mom's going to live with you for the next 20 years, that can ruin a lot of things.

[Christine Benz]

One concept you reference in the book for couples who don't have kids is what you call the gardener rose concept. I'm wondering if you can talk a little bit about that. And it sounds like you have used this concept in your own life and maybe you can share some of that as well.

[Dr. Jay Zygmont]

So we have couples. I don't really love the term, but it's called dinks. Dual income, no kids. And you have different options when you're a couple. And my wife and I have embraced this garden of the rose and you may have seen it elsewhere, it's called the gardener and the flower. I call the garden of the rose because my wife is not just any flower, she's a rose. So that's kind of why we've adopted it. And the intent is you take turns between who's providing support and who is growing. So for us personally, we both have spent a bit of time in Academia, in academics world, you get the tenure track position somebody gets. And this, the other position is for the quote unquote, trailing spouse, which to me is a terrible term. Like, you know, you get what's left over.

[Amy Arnott]

Yeah.

[Dr. Jay Zygmont]

And, but it's true in academics, like this is it. And the result is it is very hard, I think near impossible for two people in a couple to both be growing at their ideal life at the same time at the same location. You know, there's a book that actually dives into what they call the 80% marriage where you're both giving up something. And I'm like, well, but that's creating 20% resentment, like if you don't do it right. So we embrace this garden of the rose where we take turns between who is growing and who is providing support. My wife's the rose right now. She got offered a job 1200 miles away. We packed the dogs in, the cat, we went, now we're child free. We can do that. The, the hardest part is you got to see two mastiffs in the back of a Prius. That was hilarious. But we just did it and we could. And I think what happens is because you are taking turns and it's for a defined period of time. For us it's five to seven years. Whatever, it works, you can each lean into the role. The rose can be a little more selfish because that's intentional and the gardener knows they'll get their turn for us. When I'm the rose, we're going to get a boat and travel the world. It doesn't always have to be for the top career. It could be for whatever you want. But it's a great way to have that structure and be planning your life and your finances together and hopefully be equitable.

[Amy Arnott]

I'm curious about potential resentment, which I think you mentioned. You know, if you're the rose, it sounds like it would be great. You know, you're blossoming, you're pursuing your best life, you're doing what you want to do. But if you're the gardener, you're spending a lot of your time weeding, hauling around mulch and dirt, which doesn't sound like as much fun. Are there ways to kind of get around that resentment issue so that even if you are trading up and someone only has a gardener role for five to seven years, that's still a pretty long time. Is there a way to kind of build in more enjoyment or self development for someone who is taking on that role?

[Dr. Jay Zygmont]

So interesting enough, you may have it a little bit backwards. And let me explain this. So what we tend to find is there's this moment where the roses are like, hey, can I really do this? Is it okay if I do this? Like, there's like this by nature, like, can I really be selfish and focus on myself? And we tend not to see as much resentment from the gardener. But the rose purse is like, are we really doing this? Are you really with moving cross country or changing jobs or whatever else it is to follow my passions? And what happens is if you've got good communication in the couple, you can have this discussion of like, well, when I become the rose, are you okay if I move across the country? Like, well, yeah. And you start realizing it. And what you find is in most couples, I can ask them out, you know, straight up, who needs to take a turn as the rose? The gardener will point out, who needs to be the rose. The rose is going to be very reluctant to say it's me. And what happens is I tend to find that they've needed to have a change for a while. I had this discussion with somebody last night and I said, how long ago did you know you had to change your job? And I asked the person to be the gardener, I said, how long does your spouse need to do this? And her answer was, oh, probably six or seven years ago. He should have done this. And like, they both kind of laugh, but I'm like, you know, you need that change. I think where the resentment comes in or the hurt feelings, whatever else, is when people pop into these roles without having the discussion, you know, so I've seen this where like, oh, well, so and so's going back to school. We gotta change things around the house, but we have not had the discussion. I think the other thing we find which is kind of interesting is there's still a bunch of gender norms that are in this, you know. So when I moved for my wife's job, I was amazed by how many people would be like, you're moving cross country for your wife? And I'm like, yeah, why not? Like. But it's those unspoken things that cause issues rather than actually having a plan and talking about it.

[Christine Benz]

For our last question, I wanted to ask about estate planning. And perhaps you can quickly share what you see are some of the best practices for people who do not have kids who want to create an estate plan.

[Dr. Jay Zygmont]

Yeah, so the biggest challenge for child free people is actually not even paying for long term care, but it's who's going to make the decisions for you when you can't. And you know, this is the question of the executor medical power attorney, financial power attorney. And if you're in California or Arizona, you can appoint a professional fiduciary to fill those roles, but in the other states you can't. In other states it might be a trust company that can do it for you, but the trust companies once again are based on a percentage of assets model and if you're trying to die with zero, you're not a great client for them. So we are launching a product later this year. We're doing all the regulatory fun stuff that we're calling the child Free Trust, which is we're going to be able to serve as child free folks. Executor medical power attorney, financial power attorney across the country. And it's interesting because I've worked with a lot of different aging groups and they're like we've been trying to find answers for decades in some case and it just doesn't exist. And it's why people don't get the paperwork done. They're like, I know who I want to give my money to, but who's going to do it for me? It's why if you look at the general stats, something like 70% of people do not have a will. Medical power attorney, financial power attorney for child free people, that's a must because if you don't appoint somebody to make decisions for you and you don't have next to kin, the government or healthcare organizations are making decisions for you and I don't care what your politics beliefs are, but I don't trust the government not knowing me to make decisions for me. And if you don't put in your will who the money goes to, it can go to the state. You know, like these are big issues to the point where with our child free couples or child free individuals, either we are putting in their estate plan whenever we talk to them. I got somebody in their 20s and we just finished their estate plan. You know you have to have something on paper saying what your wishes are.

[Christine Benz]

Well, Dr. J, this has been such a thought provoking conversation and thank you so much for taking time to be here and congratulations on the book.

[Dr. Jay Zygmont]

Thanks for having me.

[Amy Arnott]

Thanks again. Dr. J.

[Christine Benz]

Thank you for joining us on the Longview. If you could please take a moment to subscribe to and rate the podcast on Apple, Spotify or wherever you get your podcasts, you can follow me on social media. Hristine ChristineBenz on X or Christine Benz.

[Amy Arnott]

On LinkedIn and AmyArnot on LinkedIn.

[Christine Benz]

George Cassidy is our engineer for the podcast and Carrie Gretchik produces the show Notes each week. Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email [e-mail] until next time. Thanks for joining us.

[Disclosure Officer]

This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording and are subject to change without notice. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. And its affiliates, which together we refer to as Morningstar. Morningstar is not affiliated with guests or their business affiliates. Unless otherwise stated. Morningstar does not guarantee the accuracy or the completeness of the data presented herein. This recording is for informational purposes only and the information, data analysis or opinion it includes or their use should not be considered investment or tax advice and therefore is not an offer to buy or sell a security. Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analyses or opinions for their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision. Please consult a tax and or financial professional for advice specific to your individual circumstances.

[Dr. Jay Zygmont]

Advisors and financial Experts this one's for you. Registration is now open for the Morningstar Investment Conference on June 25th and 26th. Join thousands of your peers in Chicago for two days packed with cutting edge research, expert insights and thorough analysis. Advisors can even attend for free and earn CE credits. Learn more about the MIC [e-mail] events MIC.