If you wait to have a baby until you feel financially stable enough, you could be waiting forever. It goes without saying that it’s a good idea to examine your finances and make sure you can provide for a new tiny human living under your roof when you’re younger and still figuring out how to manage money, but even older parents raising young children struggle with money issues as they try to balance saving for their child’s college costs as well as their own retirement.
The money woes that come with starting a family are not limited to recent college graduates covered in job applications and student debt. A new study from Allianz, which included more than 4,500 respondents in households with incomes of at least $50,000, finds nearly eight in 10 households with one parent 40 years or older and the first child under 5 are particularly worried about paying for college tuition and funding retirement goals. They are also twice as likely as traditional families to say retirement won’t come until after age 70.
“Juggling work and family goals is challenging no matter when you do it, and many people are choosing to get settled in their careers before starting a family,” said Katie Libbe, vice president of Consumer Insights Allianz Life Insurance Company of North America. “The older parents in our study are largely members of Generation X, which has had a number of financial setbacks, most notably the Great Recession of 2008. It’s not surprising that people in their 30s during the recession, possibly facing layoffs and underwater mortgages, would choose to wait to start a family.”
How many more mothers are waiting longer to have a first child? Allianz notes research from the Census Bureau that shows the number of first-time mothers in their 40s surged 35% between 2000 and 2012. The trend is more pronounced over a longer period. In 2012, there were nine times more first-time births to women over 35 compared to 40 years earlier.
As the cost of raising a child has surged to over $245,000, the ideal family size has shrunk. Half of Americans now say two children is the ideal number of children for a family, down from the 50s and 60s, when four children was the most common ideal size, according to a recent analysis from the Pew Research Center. The wide availability of the birth control pill and women’s participation in the workforce is partly responsible for the decline, but Gallup finds the most common answer for why couples aren’t having kids these days is because of money-related concerns.
Financially speaking, older parent family types in the Allianz study were likely to invest money (58%) and most (73%) said they were proud of what they had accomplished in their financial lives. Yet they still stressed about how to invest money — the number one concern. Making matters worse, some are delaying the best methods for setting their family on a path of financial security. A quarter of older parents said they would not consider using a financial professional, and fewer had used one in the past.
“We found mixed messages in the data from our older parent group,” said Libbe. “They seem to be relatively experienced investors who recognize the need to be careful savers. And yet, with small children in the house, they may not have a lot of time right now to seek out help from a financial professional. However, they can’t let personal financial planning wait too long – pretty soon they’ll be juggling the competing demands of their own retirement and their children’s education.”