Financial Benefits and Drawbacks of Having Children Later in Life

With the cost of living skyrocketing, it’s unsurprising that many of us are opting to have children later in life, or simply have no other choice.

My wife and I fall into the category of geriatric parents, with me being nearly 40 and her 39 when we had our first. Our decision to have two children later in life was somewhat influenced by my wife’s medical condition.

Given that having children later in life is the only viable option for many, it’s crucial to understand the financial benefits and drawbacks associated with this decision.

Financial benefits of having children later on in life

There’s a common misconception that by later in life, you have everything figured out. However, this belief underscores several advantages to having children later:

Career advancement and income stability

While job security may be a thing of the past, having children later in life often coincides with career advancement, potentially leading to higher earnings compared to your 20s. As a result, you might enjoy increased financial stability, possibly due to accumulated savings and investments.

Better Financial Planning and Preparedness

Building on the first point, having children later in life means you have likely had time to establish a solid financial foundation. 

By this stage, you have a clearer understanding of your life’s direction and a better grasp of your spending habits, which enables you to be clear on those expenses that you could do without having children and those that you could not.

Additionally, you are more likely to recognise the importance of future financial planning and might already have a will and some form of life insurance. If not, you would likely consider these as necessary expenses.

Potential for higher educational quality

With our eldest in school and our youngest in preschool, there’s always something going on, from school photos and afterschool activities to, eventually, school trips.

As an older parent, you might have the financial means to invest in tutors and extracurricular activities that enhance their learning abilities and boost their social confidence. This investment can positively impact your children’s long-term educational and career prospects, potentially leading to higher incomes and access to networks that will support their career advancement.

Financial Drawbacks of Having Children Later in Life

With the advantages that come with having children in later life, you will also experience some drawbacks.

Increased Healthcare Costs

If you haven’t already obtained health insurance, getting it later in life could result in higher premiums due to the increased likelihood of developing medical issues and the greater risk you pose to insurance companies because of your age.

Retirement Planning Challenges

Balancing retirement planning with the costs of raising children is another challenge older parents will face.

Due to the significant expenses associated with raising a child, there is a risk of being unable to save adequately for your retirement fund. This can lead to delaying retirement or requiring substantial adjustments to your retirement plans.

Limited Time to Build Wealth

As an older parent, you have a shorter time frame to accumulate wealth before major expenses, such as college tuition, come into play. 

This limited period can impact your overall financial goals and long-term financial security. 

Additionally, there might be a need for financial support from your children in later years, which can add to financial pressure.

Opportunity Costs

If you want to advance your career or start a business, this can be difficult due to the physical and emotional demands of being a parent.

Balancing the Financial Drawbacks and Benefits

Strategic Financial Planning

It’s important for those who are considering having children in later life to have a strong financial plan.

Planning should be started early, and using the financial tools and advisors at your disposal to create a detailed financial roadmap. Balancing short-term costs with long-term financial goals is crucial for ensuring financial stability as an older parent.

Optimising Savings and Investments

As an older parent, you’re likely to have some savings or investments.

As an older parent, you should consider whether you can utilise these savings and investments to create a strategy tailored to your needs and explore insurance options to mitigate financial risks and increase the chance of your children being supported financially should the worst happen.

With proper planning, you can ensure that you are well-prepared for the current and future financial demands of having a child in later years, such as increased childcare costs.

Conclusion

Speaking from experience, having children later in life comes with both financial benefits and drawbacks.

While as an older parent, you might have greater financial stability and the ability to provide better opportunities, you also face higher costs and greater long-term financial planning challenges.

Financial planning is really important in navigating these complexities and ensuring a secure financial future for your new family.