It’s probably no surprise to you that the structure of the average American family has changed drastically in the past forty years. In 1970, 40 percent of American households consisted of married parents living with children under 18 years old. But by 2012, that description only fit 20 percent of households.
Today, there is no such thing as a “typical” household. And while the principles of budgeting and saving are universal, other financial considerations are vastly different for non-traditional households. In order to successfully plan for the future, the heads of these households should investigate all of the options available to them.
Single-parent households often face financial struggles, but there are other important financial matters at stake as well. For example, these parents often don’t enjoy the security of knowing who will take care of their children in the event of their untimely deaths. Estate planning is even more important in these circumstances, and a financial administrator should be named for minor children. On the plus side, the formulas regarding financial aid for higher education often favor single-parent households, so children might have an easier time paying for college expenses.
Many couples now choose to co-habitate, rather than getting legally married. But without the legal protection of marriage, a partner will not be automatically appointed as executor of the estate, nor will they be granted the legal power to make medical decisions if the other partner becomes incapacitated. These couples must take special measures to ensure that their final wishes are granted, and that their assets are transferred as they intend. Before purchasing a home or other property together, couples should seek legal and financial counsel, and specifically outline an agreed-upon course of action in the event of a separation.
In 1970, 17 percent of households consisted of a single person living alone without a partner or children. In 2012, that number had climbed to 27 percent. Without children, these older singles might be able to save more for retirement. On the other hand, they don’t have a spouse or partner with whom to share expenses, and they might retire on a single person’s Social Security benefits rather than the benefits granted to married couples.
Since your family structure heavily impacts your financial future, all households would benefit from one-on-one financial planning services. This is the best way to tailor your saving and investing decisions to meet your future needs.