Let's face it, parenthood is a joy. But, if you're a parent in your 40s or 50s, it can also be incredibly expensive. College tuition feeswill only get more expensive, and the money you need to provide for your child will increase as they grow up.
Don’t think that you’re alone. More and more people all over the world are delaying having children. In America, the average age of first-time mothers is 21-26. Survey respondents list financial, career, and health concerns as reasons to delay starting a family.
You don’t need to sacrifice your retirement to secure your child’s college plan. With some elbow grease and creativity, you can retire with health and wealth while providing the support your child needs to thrive.
Older parents with children later in life should have a sound financial plan. Your plan must consider your needs on top of your child's needs.
1. Begin retirement planning
Retirement isn't something you stumble into. Retirement planning is something that you need to anticipate, and the earlier you start planning for it, the better off you'll be.
Before you retire, create a detailed budget that accounts for all your expected expenses in retirement. This list should include basic living expenses, hobbies, and entertainment.
By creating this list now, you can ensure that your savings will cover what you want from life after work.
You should also include a healthy safety net for unexpected events like illness or natural disasters. This step will show you how much extra finances you’ll have—which can help you plan around your child’s expenses.
2. Reduce debt
Once you know what to expect, the next step is to get rid of your debt as quickly as possible. Pay off high-interest debt, like credit cards, first—this will free up more of your income for retirement savings and reduce financial stress in retirement.
You may also have more loan options at lower interest rates, so consolidating and refinancing your debt could be wise. The simplest method to ease the burden on your retirement finances is to minimize your debt.
3. Reassess your investments
As you near retirement age, you may wish to shift your investment portfolio from a more aggressive strategy to a more conservative one focused on capital preservation.
You need to preserve and grow your investments to sustain your retirement and your child’s future. To target stability, you must shift from high-risk investments like stocks to less volatile ones like bonds.
Another crucial investment consideration is real estate. Having a forever home can be a great environment to raise a child and relax while cutting out the long-term rent costs. However, homeownership comes with other expenses like maintenance and property tax.
4. Consider delaying social security
If you're considering retiring soon, you may want to hold off for a little longer. You'll get a higher monthly benefit if you delay your retirement and continue working. You could also use that extra money to help make ends meet while supporting your child.
Delaying your retirement might sound like a desperate move, but it’s an option you have that gives benefits. Besides, a few extra years of work are nothing compared to decades of financial security, right?
Besides your finances, you also need to have a clear plan regarding your family situation.
1. Determine your family goals
This step means figuring out your desired family size, what schools you’ll send your children to, and where you want to raise them. Even a rough idea of these goals can help you begin figuring out your family expenses and the steps you need to take to afford them.
It would be best to pair your goals with your financial plan to keep them realistic and attainable. For example, a frequent parental goal is to provide the best possible education, but barring scholarships, they might not be in the cards for some families.
2. Prepare contingencies
No plan survives first contact, as the saying goes. That's why it's so important to have contingencies in place—they help your family manage unforeseen circumstances instead of ruining your plans.
Some important contingencies are: preparing emergency funds, revising your will and other legal documents, and creating a trust for your children.
3. Consider life insurance
Life insurance is essential for older parents, even if you don't want to consider it. While it may seem grim to consider the worst-case scenario, it’s important to remember that having a safety net like life insurance can help ensure your children aren’t left destitute in the event of your untimely death.
Here are two options for life insurance: term and permanent. Term life insurance plans cover you for the length of the policy. This type can be ideal for your security until your children grow up. Permanent life insurance plans are most effective when started early, as contributions need time to build value.
4. Communicate with your family
You’re not in this alone. Communication is critical when it comes to family planning. Your whole family needs to be on the same page regarding your goals, priorities, and needs. Being open and honest with your child and partner ensures they understand your expectations for their future.
You and your partner have the same goal: to raise your family in the best way possible. But sometimes, it can feel like you have to do everything. That isn’t true. Your partner also shares your burdens and can help you whenever you feel stuck or overwhelmed.
Raising a family is a team effort that everyone contributes to, so don’t forget to rely on and communicate with each other.
Enjoy the Joys of Parenthood at Any Age
Think about watching your kid’s first steps, sending them to school for the first time, and sending them away for college. These are all wonderful, emotional moments that the looming dread of financial concerns, especially for older parents, can ruin.
However, with careful planning and financial management, you should be able to enjoy all these things and more without sacrificing your comfort or the quality of the support you give your child.