Financial stability, or lack thereof, is affecting when people have children.svetikd/iStockPhoto / Getty Images
Many people are choosing to have children later in life, a decision often influenced by career ambitions and money considerations that could have longer-term impacts on their financial and retirement plans.
Reaching milestones such as landing a well-paying job, meeting a suitable partner, and buying or renting a home may all take longer than they did for previous generations because of the higher cost of living.
According to a recent Bank of Montreal survey, financial stability is the top influence on whether people decide to have children, at 44 per cent, followed by finding the right partner (34 per cent), being able to be fully present for their kids (27 per cent), mental and physical health (24 per cent), and career goals (17 per cent). More than a third of survey participants said they’d reconsider their decision not to have children if there were less of a negative effect on their finances.
According to Statistics Canada, the average age of a first-time mother in Canada was 31 in 2022 (the latest data available), up from 26.7 years in 1976. StatsCan stated that women are delaying childbearing to pursue higher education and establish their careers, resulting in more stable finances and job security before starting families.
In the U.S., the rate of women aged 35 to 39 giving birth increased by 71 per cent from 1990 to 2023, and by 127 per cent for women aged 40 to 44, according to the National Vital Statistics System report.
Samantha Sykes, 42, senior investment advisor with Sykes Wealth Management at Raymond James Ltd. in Toronto, can relate personally. She gave birth to her two children at the ages of 35 and 38 after taking some time to figure out her career path and meet her spouse.
Ms. Sykes says building a thriving advisory practice took years in an industry in which as many as 80 per cent of advisors don’t make it past the five-year mark.
She notes that her clients who delayed parenthood are well educated and financially secure. Many have seen reports showing that it can cost $367,000 to raise a child to age 18.
“Whether their decision was by choice or by chance, the delay doesn’t affect them as much if they [plan their finances] to make sure they get off on the right foot,” she says.
Amy Dietz-Graham, senior wealth advisor and portfolio manager at National Bank Financial Wealth Management in Toronto, says she receives inquiries from her female clients frequently about parenthood and fertility treatments.
She says younger, career-oriented women want to explore the option of having kids later, just in case, and may ask about the cost of freezing their eggs, for example.
“It’s becoming more normal, so you have to shift your financial planning to account for these things,” says Ms. Dietz-Graham, who used fertility treatments to start her own family.
Delayed retirement, too?
Delayed parenthood can sometimes translate into delayed retirement.
When people start families in their 20s and early 30s, their children are often grown before the parents reach their highest-earning years. In those cases, empty nesters may be in their 50s and can then squirrel more funds into their retirement savings and play catch-up if necessary, Ms. Dietz-Graham says.
However, raising young kids in your 40s and 50s changes that dynamic because peak earnings coincide with child care costs, extracurricular activities, paying a mortgage, and saving for post-secondary education and the parents’ own retirement, Ms. Dietz-Graham says.
“All of these objectives have to be done at once,” she explains.
Hervin Pesa, certified financial planner at Aware Financial in Calgary, has some parent clients who have chosen to scale back on their work to be more present with their young children.
While these clients aren’t experiencing financial strain, he says they’re aware of the need to save for post-secondary education, which may conflict with their own retirement aspirations.
“They’re a little uncertain about picking a date,” he says about retirement. “Many want to keep working rather than retire early. They may be helping the kids purchase their first home.”
Sometimes, the retirement date is out of a client’s control because of a layoff or health issue. In those cases, Mr. Pesa will run financial projections starting at age 55, so they know their options.
Ms. Dietz-Graham notes that some older parents began investing before starting a family, so retiring at a traditional age is not out of the question. But she notes they may not have an ideal investment strategy in place.
“It’s not just saving but making sure they’re actually investing the money,” she says. “That’s really important if your timeline may be shortened.”