Delaying Parenthood? Be Prepared for These 4 Financial Planning Challenges
When Jennifer Lauer gave birth to her daughter at the age of 43, she joined the ranks of a growing number of women becoming first-time moms later in life. The Centers for Disease Control estimates the number of over-40 moms has more than quadrupled in past couple of decades.
“I didn’t set out to wait until I was in my 40s to have a child, but I think I’m a better parent now than I would have been when I was young and focused on pursuing my career, having fun, traveling and doing all the things people do in their 20s and 30s,” said Lauer. “Now that I’ve had those experiences and gotten them out of my system, I can focus my emotional energies, mental capacity and financial resources on my child. And I think she and I both benefit from that.”
While later-in-life parents may feel more accomplished, confident and focused than their younger counterparts, the choice to delay parenting presents a distinct set of financial planning challenges future moms and dads will want to consider.
1. Getting pregnant later in life may be expensive. While it’s possible for healthy 40-plus-year-old women to conceive naturally, fertility declines as people age; many older women turn to assisted reproductive technologies such as in vitro fertilization (IVF) to get pregnant. If you think assisted reproduction is an option you want to keep open for your future, plan ahead for the expense because infertility treatments are costly, and the procedures are not always covered by insurance. According to the American Society for Reproductive Medicine the average cost of an IVF cycle in the United States is $12,400, and the cycle is often repeated.
2. You may struggle to fully fund competing obligations. If you become a parent later in life, chances are you’ll be laser focused on saving for retirement at about the same time your child starts thinking about college. So if you find yourself struggling to fully fund both goals within a limited time frame, experts say to put your own financial independence first. Why? Because kids have options to fund their education, such as loans and scholarships. Retirees don’t. As Northwestern Mutual’s Rebekah Barsch noted in “Which Should You Save For First: Retirement or Your Kids’ College?,” “It’s much like the instructions you’re given by flight attendants when you travel by air: In case of emergency, put your oxygen mask on first before putting it on your child. If you don’t take care of funding your own retirement, you may end up weighing down your kids with that responsibility later in life.”
3. You may have to fund a longer-than-average retirement. Here’s another reason to make funding your own retirement a financial priority: A recent Boston University School of Medicine study showed that women who gave birth to a child after the age of 33 have a greater chance of living longer than women who had their last child before the age of 30. And an earlier New England Centenarian study showed women who gave birth after age 40 were four times more likely to live to age 100 or beyond. What’s the connection between later-in-life motherhood and longevity? According to report co-author Thomas Perls, MD, MPH, “The natural ability to have a child at an older age likely indicates that a woman’s reproductive system is aging slowly, and, therefore, so is the rest of her body.” While most women probably view living longer as a positive, longevity also means women may need to fund 30-40 years in retirement, which means without proper planning they may be at a greater risk of outliving their income.
4. You’ll want to revisit your estate plan. While every family should have fundamental estate planning tools in place, planning for the unexpected takes on a whole new meaning when children enter the picture. You want to be sure they’re taken care of if something happens to you. So although you may already have a will, powers of attorney and some life insurance, take a fresh look at everything once you become a parent. Make sure your will includes the naming of a legal guardian for your child. And review your life insurance policy to make sure it will help cover the expenses of raising a child.
For all these reasons, experts say it’s important to make the choice to delay parenting with your eyes wide open—which includes planning for the financial challenges that may come your way. And if you do plan ahead, the good news is this: You’ll likely be free to enjoy raising your child with the benefit of perspective that can come only with age.
“The things that I might have stressed over when I was younger don’t affect me now,” said Lauer. “I don’t freak out if we’re in the kitchen and she starts putting spinach in the mashed potatoes. We just have fun with it. When you’ve had time to experience life before having children, I think you become more emotionally settled, clearer about what’s important and happier with who you are. And I think that has a positive impact on both mother and child.”