It is more common than ever to have children later in life, with many starting a new family after getting divorced.
Figures from the Office of National Statistics show that the number of women over the age of 40 having children has trebled in the last 35 years, while the rate for women aged 35 to 39 has nearly trebled.
But while having children in later life keeps people on their toes and feeling young at heart, it can wreak havoc on your finances.
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According to research from Saga Money, having children in later in life impacts the amount of debt people have as they get older.
A poll of almost 9,000 over 50s shows that 12% still have a mortgage. This figure rises to 20% for ‘second-lifers’ – people over 50 who have children with a new partner following a previous marriage or long-term relationship.
What’s more, these ‘second lifers’ have a bigger mortgage than people their own age without a new family – with an average of more than £80,000 left to pay on their mortgage, £20,000 more than traditional families.
As well as having a bigger mortgage to pay off, second-lifers are also more likely to have non-mortgage debts, such as loans with nearly a fifth of those with a second family having almost £12,000 of outstanding debts on average.
So what can older parents of young children do to get their bank balances back into the black? Is there a secret to your keeping your finances on the track?
Browse our money articles for more useful information.
Having children later in life can have a detrimental effect on your retirement plans – if you are becoming a parent just as you’re hitting your peak earning years, at a time when you should be ploughing money into your pension.
To add to your woes, as more of us delay marriage and babies, a growing number of parents are poised to hit the traditional retirement age just as their children are heading off to university.
“With younger parents, the children are generally financially independent before the parent reaches retirement; giving them a few years once the children have flown the nest to hopefully recover their retirement planning,” said Scott Gallacher, an independent financial adviser at Rowley Turton.
“Older parents need to consider whether they will be able to continue working until the children are financially independent, and if not, will need to determine whether their retirement provisions are sufficient to support them and their children.”
Are you overestimating the power of your pension fund?
Ask any parent with small kids what their biggest expense is each month, and they will often say childcare.
According to the Family and Childcare Trust, it now costs around £212 on average to send a child aged under two to nursery for 50 hours a week in Britain, a total of £11,024 per year. While those that live in London face much higher costs with a full-time nursery place averaging £284 weekly – or £14,768 annually.
What’s more, childcare costs are rising way above the rate of inflation in England. For instance, a nursery place for a child aged two or under is now 77% more expensive than it was in 2003. However, average earnings in real terms are now at similar levels to those of 2002–03. Which means that the cost of childcare is eating more of our salaries than ever before.
As a result, when it comes to childcare, millions of working parents are left with little choice other than to keep it in the family – with one in three parents relying on at least some grandparent care, rising to half of those just coming back from maternity leave.
But while many grandparents may be retired and thus able to help with childcare, the older the parents, the older the grandparents who may then be unable to help – meaning they are forced to fork out for nursery fees.
As a result, getting the balance of pensions/childcare is difficult – there just isn’t enough money to go around.
People should be cautious about focusing too much on the here and now of childcare by not paying enough into your pension as this could leave many facing a very bleak retirement, said Gallacher.
“This is a difficult challenge for all parents, but especially for older parents,” he said.
“Parents need to fully consider whether or not financial sacrifices, such as a lower standard of living or working longer, will be required to enable them to support having children and if this sacrifice is one they want to be making.”
Read our guide to tax and gifting money to children.
While it makes financial sense to pay off your mortgage before you retire, thanks to costly childcare, having a young family can make this a challenge.
Gallacher said: “When others your age would be starting to make over payments on their mortgages due to their kids having left home, older parents face having less money, due to the costs of raising children, and this may mean that you have to extend your mortgage term to keep mortgage repayments affordable.”
What's more, lenders have age caps on their loans on offer, which can leave older parents forced to consider less competitive offers.
“Lenders look at income rather than assets when deciding whether to lend, so older parents who are looking to take out a mortgage might find it tricky to prove sustainability of income into retirement,” said Jonathan Harris, director of mortgage broker Anderson Harris.
“Borrowers who take a mortgage out later in life are being penalised although lenders are getting wise to this and becoming more flexible with Nationwide and Halifax recently increasing the maximum age at which they are prepared to lend,” he said.
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