If you’re having children later in life — a phrase that’s impossible to define but let’s go with your 40s and beyond — you may wonder what the future will bring. For instance, if your health isn’t the greatest, and you’re having kids in your 50s, you may worry that by the time you’re choosing your kid’s college, he or she will be choosing your nursing home.
There are some solid benefits to becoming a parent later than when our parents and grandparents tended to become moms and dads.
“I think as older parents, we’re more mature and confident in our parenting, and as a result have been better parents to our boys,” says Kathleen Lynch, an intellectual property attorney in Cary, North Carolina. She married at 38 and had twin boys at 41.
Still, even if your income is steady and your career is on track, there are some financial factors to consider. While you’re fretting about someday being mistaken for your kid’s grandparent, don’t forget to worry about the truly important stuff.
Life insurance. Every parent should have life insurance, no matter their age. As Whitney Lee, a financial advisor with oXYGen Financial Inc., in Alpharetta, Georgia, puts it, “Nobody wants to be a burden to those they love, nor do they want to leave them high and dry.”
But the downside, if you’re just getting life insurance for the first time, is that the premiums are going to be through the roof, compared to if you had bought it years ago. For instance, according to ValuePenguin.com, the average monthly payment for term life insurance (20 years, worth $250,000) if you’re a 30-year-old nonsmoker is $27.88. If you’re 50, you’ll pay $76.58.
Of course, on the bright side, you’ve made it this far; you’ve saved a lot of money in premiums, and you’re more likely to be able to afford $76 a month than a 30-year-old could. But knowing all that may not prevent you from feeling a little queasy, once you get your policy in place. If you’re going to have kids soon, and you don’t have life insurance already, get it now. It’s only going to get more expensive later.
Your will. While we’re on the topic of life and death, this would be a good time to set up a will or update it. (And congratulate yourself if you have a will. According to a March Caring.com survey of 1,000 American adults, only 56 percent of parents have a will or living trust document.)
“I always advise my clients to set up a will as soon as they have children. This is especially important for older parents,” says David Hryck, a wealth advisor and tax lawyer in New York City.
Why is it so important for older parents? You probably have far more assets than you did some decades ago. If you became a parent in your 20s, chances are, if you had passed away, the only assets you could have left your kids were a security deposit to your apartment and a comic book or CD collection. But now, you may have a house, a nice car — or two — and a lot of stuff.
While you’re at it, Hryck says this would be a good time to choose a legal guardian and designate beneficiaries for insurance policies and any investment accounts you have.
Retirement. Kids keep you young, some people swear, and there may be some truth to that. Or at least they may keep you hustling in the workforce longer. Mark Zoril is a financial advisor and a 50-year-old dad. He has two daughters, a 4-year-old and 2-year-old.
Zoril figures he will retire at age 77. “This will provide us enough time to provide for ourselves and our children,” he says.
Now, for those people thinking, “yikes,” it is true that he wouldn’t have to wait that long. When Zoril turns 77, his kids will be 29 and 31, well past the age at which they will have likely joined the workforce. Still, if he works until he is 77, he is theoretically able to avoid taking as big of a financial hit if his daughters move back under his roof after college, or if he wants to, say, help them pay for graduate school.
Delaying retirement may not work for everyone, especially those with health issues. Still, if you had kids later in life, you may feel you need to put off retirement a bit longer than you might have otherwise.
And that may not be a bad thing, says Zoril, who, it’s important to note, wants to retire later. “I have been very influenced and inspired by clients that work well into their 70s and 80s,” he says. “By and large, they are far happier and healthier than my clients that retire early.”
While you may choose to delay retirement, don’t put off saving for it. Circumstances may change, after all, and as Ed Snyder, a certified financial planner in Carmel, Indiana, says: “You can get loans for college. You can’t get loans for retirement.”
Debt. No age group is immune, but keep in mind that it’s especially easy to rack up debt after you become a parent. That first year is particularly tough: You’re buying cribs and other baby furniture, diapers, a car seat, clothing, perhaps formula and maybe paying for day care. A 2010 U.S. Department of Agricultural report found that an average middle-income family spends approximately $12,000 on baby-related expenses in that first year.
If you go nuts with your spending and find yourself buried under thousands of dollars of credit card debt in your 20s or 30s, you at least have some time to correct-course. But now you’re in your 40s or 50s.
“As you get older, you have less time to make up for these types of expenses,” Hryck says. “Don’t deplete your retirement savings, and don’t access your 401(k) early. Stick to the plan that has gotten you this far.”
Your time. You’ve spent a long time living your life and doing your own thing, and, sure, it isn’t exactly a secret that parenting devours your hours. Still, the longer you wait to become a parent, the more of an adjustment you’re in for. This isn’t an argument not to have children, but it’s something to consider so you aren’t completely thrown off course when you have a baby mess up your carefully crafted, years-in-the-making routine.
“Try to let go of being in control. Kids defy plans,” advises Christian Muntean, a management consultant in Anchorage, Alaska, who became a father at age 41.
Muntean suggests being prepared to be stressed out, lose a lot of sleep and find your world revolving not around you but your kids. “Once that’s accepted, everything else is a lot easier,” he says.
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Having Kids Later in Life? 5 Key Financial Considerations originally appeared on usnews.com
