How our changing family lives make financial planning more relevant

Advances in technology, shifting social norms, changing family structures and evolving economic realities are reshaping how people interact and plan for the future. While many of these changes are obvious in our day-to-day lives, some of the most significant developments are occurring quietly in the background: people are having fewer children, marrying later and, in many cases, choosing different life paths altogether.

Although demographic trends may seem far removed from personal financial planning, they will have profound implications for economies, investment markets, retirement systems and wealth transfer over the coming decades.

As individuals we will feel the impact of these changes. But we also have to deal with new family dynamics. The size and make-up of a family influences how many incomes support a home, who may need care, when people can afford to buy property and where assets eventually go.

How the world looks very different

The world has transformed dramatically over the past two decades. The internet has become central to daily life, smartphones have replaced landlines, streaming has replaced VHS tapes and remote work has become commonplace.

These changes have altered not only how people work and consume information but also how they build families and plan their futures.

Research from the Pew Research Centre has found that approximately three in ten American adults are single, meaning they are neither married, living with a partner nor in a committed romantic relationship.

The study also found that 57 percent of single Americans were not actively seeking a relationship or even casual dating opportunities. These statistics suggest that relationship patterns are changing in ways that previous generations may not have expected.

The impact of fewer children

According to the Organisation for Economic Co-operation and Development’s Society at a Glance 2024, the average fertility rate across OECD countries fell significantly from 3.3 children per woman in 1960 to 1.5 in 2022. A rate of approximately 2.1 is generally considered necessary to maintain a stable population without immigration.

Mothers are also having children later in life. The average age for a first child has increased from approximately 26.5 years to 29.5 years over the last three decades. Marriage ages have risen as well, with women in OECD countries marrying at an average age of approximately 32 years and men at approximately 34 years, compared with 25 and 28 years respectively in the early 1990s.

What does this mean for your money?

In our households, these shifts may mean major financial commitments are squeezed into shorter periods.

Starting a family later may mean paying a bond, school fees and supporting ageing parents while trying to build retirement savings.

Remaining single for longer means one income funding housing, insurance and emergencies. Couples who do not have children may have greater freedom to save, but they need to decide who will receive their assets and who could assist them in later life.

A possible outcome is a greater concentration of wealth among fewer people. If families become smaller and fewer people have children, inheritances may increasingly flow to nieces, nephews, extended family members or charitable organisations. Wills, beneficiary nominations and plans for care become particularly relevant for people who do not follow a traditional family model.

Labour markets may also evolve. Fewer working-age individuals could create labour shortages in certain sectors, increasing the importance of automation, technology and productivity improvements. That may change the skills we need, the security of our income and the investments that benefit from new patterns of demand.

Healthcare costs grow

Healthcare expenditure is another area likely to grow. Older populations generally require greater medical support, healthcare infrastructure, retirement accommodation and specialised services.

For us, longer lives will mean more years to fund after work and a greater chance of needing medical or long-term care. Retirement assumptions based on a shorter lifespan may no longer be sufficient.

In many developed countries, young adults continue living at home far longer than previous generations because they cannot afford to move out. Rising housing costs often leave young couples under significant financial pressure, limiting their ability to save, accumulate wealth or start families. Delayed home ownership can also affect how much time they have to repay debt and build assets before retirement.

An adaptable plan for change

Changing demographics require a rethink of traditional assumptions so we can build more resilient financial plans and navigate an evolving world with confidence. Now more than ever, there is value in the peace of mind provided by having a trusted financial planner by your side.

Your financial plan needs to be adaptable and highly tailored to your circumstances, without ignoring the impact of shifting demographic trends.