Bringing a bundle of joy into your life is a magical experience, regardless of when it happens. However, as more and more couples choose to delay parenthood, there’s a growing conversation about the financial implications of having kids later in life.
The Joys of Later Parenthood
Let’s start on a positive note – the joys of having kids later in life.
Emotionally, older parents often bring a wealth of life experience and emotional maturity to the table.
In a 2017 study published in the journal European Journal of Development, Dutch researchers looked at the psychosocial development of two groups of children at ages 7, 11, and 15. One group was born to moms older than 31 and the other was born to moms younger than 31. When analyzing their psychosocial development, they were surprised to find that older moms were less likely to scold or physically discipline their kids.
“Overall, the children of older moms were better behaved, well socialized, and emotionally healthy in their pre-teen years,” says Dr. Salber. “In other words, older moms’ more relaxed parenting behaviors appear to have paid off for these youngsters.” (Parents)
Financial Stability and Career Advancement
One of the perks of delaying parenthood is that you may have had more time to climb the career ladder and increase your earning potential. This financial stability can provide a cushion for the added expenses that come with raising a child. You might have more savings, better insurance coverage, and a more comfortable home – all essential factors in ensuring a secure future for your family.
Moreover, having established your career, you might have more negotiating power when it comes to parental leave and flexible work arrangements. Many companies now recognize the importance of work-life balance, making it easier for older parents to balance their professional and family responsibilities.
Financial Considerations of Later Parenthood
Planning for Education Costs
When you become a parent later in life, you may find yourself planning for your child’s education at a stage when many of your peers are preparing for retirement. And that’s no small thing – the 2023 estimate to raise a child to age 17 has risen to $310,605, jumping from $233,216 in 2017.
One instinct may be to quickly and aggressively fund a 529 education savings plan, but be sure to consider whether you expect to be taking required minimum distributions (RMDs) while some or all of your children are in college. If you will, consider whether you may want to use the RMDs to fund your children’s college expenses, especially if you don’t expect to need those funds for living expenses.
Depending on how late you have children, you might need to leave any inheritance for your children in trust. After all, many of us may not have made the best financial decisions if we inherited a substantial amount in our 20s or 30s. If you think you may want your assets to pass via a trust, you may want to consider making additional Roth conversions. For tax reasons, a Roth account is preferable to an IRA account if it passes via a trust.
You may need to revisit the need for life insurance if you add children to your family in your 40s, 50s, or beyond. In addition to the amount, you may need to consider permanent insurance instead of term insurance to make sure it will remain in place for the needed period of time.
Long-Term Care Planning
If you have children 20 to 30 years later than many of your peers, you’ll want to give some additional thought to how you will plan for long-term care needs. If you would rely on the assistance of a settled child who has recently become an empty-nester, is it a good idea to expect or even accept the same help from a twenty-something or thirty-something child who is just beginning his or her career?
The good news about waiting to start a family at a later age is that you hopefully have had a head start on saving for retirement.
However, you might be wondering if you should start contributing less in one area (retirement) to save more in another (college education).
Consider consulting a financial advisor to help create a comprehensive plan that addresses both your short-term and long-term financial goals. This might involve reevaluating your investment strategy and exploring other savings vehicles.
Having kids later in life brings both joy and financial challenges. While you may enjoy greater financial stability and emotional maturity, fertility treatments, healthcare costs, education expenses, and retirement planning become critical considerations.
The key to navigating these financial waters successfully is early and strategic planning. Whether it’s establishing a solid education fund, optimizing your healthcare coverage, or reevaluating your retirement plan, being proactive can help ensure that you provide the best possible future for your child without jeopardizing your financial well-being. Parenthood is a journey, and with careful financial planning, you can make it a fulfilling and stress-free adventure, no matter when you decide to embark on it.