Older parents may find some financial advantages to having children a little further along. They may have climbed higher up the property ladder, for example. They may be more established in their career, potentially giving them more security and negotiating power around flexible working.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, says the age at which you choose to have children is “nobody’s business but your own”, but adds that “if you’re planning a baby in your 40s or 50s, there are some extra financial issues to consider.”
1. Take care over extra borrowing
For older parents, a bigger mortgage may mean carrying debt into their 70s, or the risk of approaching retirement with non-mortgage debts left to repay, both of which could have a big impact on their disposable income in retirement.
2. Remember your pension
The ’empty nest’ period will come later in life – giving you less of an opportunity to focus on building retirement savings. It means you may need to keep up consistent pension payments throughout as much of your years as parents as you can – and prioritise it above non-essential spending.
— DWP (@DWP) July 15, 2018
3. Consider university costs sooner rather than later
If your child may be heading to uni at around the time you had planned to retire, you could consider setting aside funds specifically to cover this period, in advance. One option is to put money aside in their Junior Isa, which will ensure the money is safely tucked away tax-free to the age of 18. You can contribute up to £4,368 this year into a Jisa.
4. Talk to your own parents about later life care
It’s worth knowing in advance the provisions your parents have made in case they need care as they get older, and the part they expect you to play. If you have young children and parents with care ne at the same time, find out about the resources available to help.
— Money Advice Service (@YourMoneyAdvice) January 22, 2014
5. Have a childcare ‘plan B’
Some grandparents are keen to pitch in with childcare into their 80s – but some will feel their childcare days are behind them. Others may find their health isn’t good enough for them to help. If they’re unable to pitch in, it’s better to put a plan in place early and try to find affordable care.
6. Plan for the worst-case scenario
This is vital for parents at any age, but it can become more pressing as you get older. Life insurance can help protect children if parents were to die, and critical illness cover and income protection provide support if parents suffer an illness or injury. You may want to have details of who would take care of your children included in will planning.
— Citizens Advice (@CitizensAdvice) June 7, 2015
7. Factor in the high income child benefit tax charge
Older parents may be closer to their peak earning potential, and one parent may earn more than £50,000 – the point at which some child benefit may need to be repaid. You can choose not to apply for child benefit, but if one of you isn’t working, ensure you’ll still receive national insurance credits towards your state pension by completing a form.
8. Talk to your employer
If you’re at management level, you may be setting a precedent in your company as a boss by asking to work shorter or more flexible days. Pre-empt any potential problems and build solutions sooner rather than later.
— Money Advice Service (@YourMoneyAdvice) March 28, 2017
9. Factor in any additional expenses when starting a family
Depending on the circumstances, if fertility treatments are needed they can be costly, so consider the implications, particularly if it means starting parenthood in debt.
10. Make plans for your children’s property dreams
For older parents, re-mortgaging to help their children onto the property ladder may not be practical, as it could make it harder to clear debts before retirement. Over-55s may be able to help by dipping into their pension pot, but this will have implications for their income for the rest of their life.
Press Association 2019