26 or 36: When Can You Really Afford a Baby?
March 13, 2017
With the lifetime cost of kids averaging around a quarter of a million dollars, you might wonder how anyone affords them. But if you plan it just right, is there an ideal window of time to start a family? Financial planning site LearnVest investigated the belief that waiting to have kids until you’re financially stable is best.
Meet the couples who served as subjects for the study: Emma and Tyler and Holly and Brendan. While a decade apart, each couple is considering starting a family.
Emma and Tyler are 26 year olds with a combined income of $73,000. They’re paying off student loans and credit card debt, but consider themselves emotionally ready for a baby.
Holly and Brendan, both 36, have a household income of $120,000. Just months away from being done with student loan payments, they’re also saving for retirement.
Seems like we have a clear winner when it comes to who’s in better financial shape for kids, right?
Holly and Brendan definitely have a leg up in the savings department, meaning they’ll be more likely to contribute to a child’s college fund and continue putting money towards retirement. But because they’re in too high of a tax bracket (above $110,000), they won’t be able to take full advantage of the child tax credit — $1,000 per child for married couples filing jointly. Emma and Tyler, however, will.
Holly and Brendan also have more money to use towards childcare, and perhaps enough financial stability for one parent to take time off from work. But younger couples like Emma and Tyler often have their own secret weapon: parents that may be young and active enough to care for grandchildren for free. And statistically speaking, Emma is more likely to return to work on her current career trajectory than Holly. Just 40 percent of high-achieving professional women were able to find a good full-time job in their industry after taking time beyond maternity leave off, The New York Times reported last year.
Another financial hindrance to older couples? Holly anticipates that although she’s healthy, her age may face her with the need for IVF treatments, averaging $12,400 per cycle.
LearnVest concluded that it’s a draw for these couples. One is not necessarily in a better financial place than the other when it comes to starting a family.
The question “when is the best time to have kids?” remains unanswered.