Younger moms vs. older moms: The financial implications

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on Feb 23, 2019

There is no right answer when it comes to the question of when (or whether) to have kids. Opinions abound over the merits of starting a family young, when energy levels are high and fertility more forgiving, versus waiting until you’ve built a career and paid down debt.

Ultimately, parents-to-be choose what works best for them. Or not, and Mother Nature makes the call.

But one thing is abundantly clear. The age you are when you have your first child has profound implications for your financial future.

In some things, being younger is a positive.

These areas include:

On the other hand, age can offer advantages in other areas, such as:

Understanding the implications in each of these areas when considering the arrival of a baby can make the transition to parenthood that much sweeter.

Access to family caregivers

Younger moms may have less in the bank than their more aged counterparts, but they also potentially have greater access to family caregivers.

Indeed, grandparents who are still in their late 50s and early 60s generally have more energy and fewer health problems than they do a decade later and may be more willing to watch your little one (for free) while you return to work on either a part-time or full-time basis.

That’s a significant savings opportunity for the millions of moms who work. Some 70 percent of mothers with children under the age of 18 participate in the labor force, according to the Department of Labor.1

The alternative option for childcare, including daycare centers and nannies, can be too expensive for many families. For infants, the average annual cost of care ranges from $4,800 to $22,600 per year, depending on location, according to the Economic Policy Institute.2

“When grandparents get older and have less energy, they aren’t able to help as easily,” said Erika Safran, a financial advisor with Safran Wealth Advisors in New York City.

Avoiding the ‘sandwich generation’ complications

At the same time, said Safran, younger moms are less likely to experience the emotional and financial hardship of becoming caregiver to both their own children and their aging parents simultaneously, often referred to as the “sandwich generation.”

According to MassMutual’s 2018 State of the American Family Study , 18 percent of Americans with household incomes of $75,000 or more and at least one dependent under age 18 know that their parents are counting on them to become caregivers, but don’t see how they will be able to afford it. That figure is up from 10 percent in 2013.

     (Learn more: How to survive in the ‘sandwich generation’)

Roughly 44 million Americans, most often women in their 40s and 50s, provide unpaid support to older adults, according to the Family Caregiver Alliance . Many are forced to derail their careers to be more present for their parents, which affects their ability to save and secure their own financial future.

Life insurance is less expensive when you’re young

Many who purchase life insurance do so for the first time after having kids to protect their loved ones from financial loss in the event that the policyowner should die prematurely.

The same is true of disability income insurance, which is designed to help replace the policyowner’s income if he or she is no longer able to work due to illness or injury.

In either case, youth is an advantage. The older you are, the more you’ll pay in annual premiums to provide for your family. Environmental factors, lifestyle choices, your health, and gender also affect costs.

“If you don’t already have life insurance that covers your income, it’s going to get more expensive as you get older,” said Safran.

Those who wait to purchase life insurance or disability insurance when they’re older, she said, also run the risk of developing a health condition that makes coverage cost prohibitive or renders them uninsurable.

     (Calculator: How much life insurance do I need?)

The younger you are, the easier it is to conceive

Fertility declines with age. It’s just biology. While many factors influence a woman’s ability to conceive, including lifestyle choices, body weight, and disease, age is foremost among them.

According to the national fertility association RESOLVE, a woman in her late 30s is about 30 percent less fertile than she was in her early 20s.3

That’s not an endorsement for starting families sooner, merely an acknowledgement that younger moms are less likely to require costly fertility treatment.

One in eight couples have trouble getting pregnant or sustaining a pregnancy, with 7.4 million women receiving some type of infertility services in her lifetime, according to the Centers for Disease Control and Prevention.4

The cost for one in vitro fertilization (IVF) cycle ranges from $10,000 to $15,000, which does not include the required medications that can be as much as $3,000 per cycle.5

Waiting means more money

On the flip side, older moms in their 30s, 40s, and even 50s have a number of advantages over the younger moms on the playground — quite apart from the wisdom and perspective that comes with life experience.

Having taken the time to focus on their careers, mature moms generally command a higher annual salary and may also have better workplace benefits, such as health insurance, paid leave, and retirement plans. That’s especially important for single moms and the growing percentage of women who are household breadwinners. Mothers are the primary or sole earners for 40 percent of households with children under age 18 today, compared with 11 percent in 1960, according to the Labor Department.

Older moms, especially those in double income homes, may also have had the chance to check off important financial milestones before having kids, such as scraping together a down payment for a first-time home, establishing an emergency fund for a rainy day, or paying down student loans and other debt. That positions them to better assimilate the added expense of diapers and dental care.

According to the U.S. Department of Agriculture, the cost of raising a child today for middle-income families is $233,610, excluding the cost of college.6

Better work-life balance

Moms with more money stashed away also have more options. They may be able to stay home with their child if they choose, and for however long they want, rather than being forced to return to work after their maternity leave ends due to financial need, said Safran.

And, because their professional network and work experience are (presumably) more robust, they may be able to land a consulting gig or part-time position more easily while they stay home with their child, said Safran.

That enables them to keep their career skills current so they can pick up where they left off if they return to work full-time.

Retirement savings

More years in the workforce (pre-kids) also potentially translates into a bigger retirement fund, something women, in particular, need to prioritize, said Cindy Hounsell, president of the Women’s Institute for a Secure Retirement (WISER).

Women statistically outlive men by nearly five years, according to the CDC, but they still earn just 83 percent of what men earn for the same job, even accounting for education and experience.That means less disposable income to fund their 401(k) accounts.

The average account balance for women participating in a defined contribution retirement plan in 2016 was $76,143, compared with $117,270 for men.8

     (Learn more: Why women should be selfish financially )

Money contributed to a tax-friendly retirement account, such as a 401(k) or Individual Retirement Account (IRA), during the first decade of one’s career has the potential to produce the biggest long-term returns due to the principal of compounded growth, said Daniel D’Ordine, founder of DDO Financial Advisory in Rhinebeck, New York.

In fact, a person who waits until age 36 to begin making traditional IRA contributions of $5,500 per year would have amassed roughly $556,000 in savings by age 65. That figure assumes a 7 percent annual rate of return and total lifetime contributions of $165,000.

By contrast, an investor who starts contributing $5,500 per year to his or her IRA at age 26 and then never makes a new contribution after age 35, would come out ahead with a balance of $619,000 at age 65, assuming the same rate of return. He or she would only have contributed a total of $55,000 to the account.

The lesson? Women who fund their 401(k)s or Individual Retirement Accounts early on, even if they later leave the workforce when they have kids, are more likely to retire on time, better able to maintain their lifestyle, and less likely to require financial assistance from their kids as they age — which is ultimately one of the greatest gifts you can give them.

College savings

While no parent should feel obligated to pay for their child’s college education, nor jeopardize their own retirement savings to fund a college account, many consider it a financial priority. Indeed a MassMutual study found that 4 out of 5 families in the U.S. see a college degree as the key for a child to open the doors of opportunity, establish a career, and achieve financial security.

Older moms with bigger salaries and more savings may have an easier time realizing that goal.

According to the College Board, tuition, fees, and room and board for full-time students average $21,370 at public four-year in-state colleges and universities, and $48,510 at private, nonprofit four-year colleges for the 2018-2019 academic year.9

Most students, however, receive some form of financial aid, bringing the average net cost (sticker price minus grant aid and tax benefits) of tuition, fees, and room and board down to $14,880 at public four-year in-state institutions, and $27,290 at private four-year colleges.10

A financial professional can help new parents develop a savings strategy that works for them.

     (Calculator: How much do I need to save for college? )

The decision to have kids is an emotional one, above all else, but there’s no denying that a baby in the house alters your financial picture in a profound and permanent way.

Younger moms may have better access to family caregivers and qualify for cheaper life insurance, but moms who wait to start a family may benefit from greater retirement security and work-life balance.

By planning ahead for the financial challenges you may face, you can help eliminate much of the stress that comes with having kids. And that’s a good thing. Because you’re going to need all the sleep you can get.

Learn more from MassMutual…

A financial planning ‘to-do’ list for new parents

New stepparent? Financial steps to take now

Need financial advice? Contact us

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U.S. Department of Labor, “12 Stats About Working Women,” March 1, 2017.

Economic Policy Institute, “The cost of child care in…” April 2016.

Resolve, “Fast Facts,” 2019.

Centers for Disease Control, “National Survey of Family Growth” 2006-2010.

Verwellfamily.com “How Much Does IVF Really Cost?” Nov. 12, 2018.

Department of Agriculture, “Expenditures on Children by Families, 2015,” Jan. 13, 2017.

Centers for Disease Control, “Health, United States, 2016: With Chartbook on Long-Term Trends,” 2016.

Vanguard, “How American Saves,” 2014,

College Board, “Trends in Higher Education: Average Published Undergraduate Charges by Sector and by Carnegie Classification, 2018-19.”

10 College Board, “Average Net Price over Time for Full-Time Students, by Sector,” 2018.

The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of MassMutual.