What having children later in life means for your financial planning

There may be very good reasons to postpone starting a family, but it’s also important to consider the potential financial implications when you make this call, said Farzana Botha, product specialist at Sanlam Savings. Picture by Flávia Gava /Unsplash

There may be very good reasons to postpone starting a family, but it’s also important to consider the potential financial implications when you make this call, said Farzana Botha, product specialist at Sanlam Savings. Picture by Flávia Gava /Unsplash

Published Apr 14, 2023

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The Easter weekend saw Hilary Swank announce the arrival of her newborn twins – a girl and a boy – as she became a mother at 48.

Swank joins a growing number of celebrities who became parents in their 40s and 50s, including Naomi Campbell and Janet Jackson.

There may be very good reasons to postpone starting a family, but it’s also important to consider the potential financial implications when you make this call, said Farzana Botha, product specialist at Sanlam Savings.

There are many reasons why people put off having children, including job goals, deferred marriage or long-term relationships, the need for greater financial security and emotional maturity, and the desire to pursue other interests like travelling.

While there are benefits to this, Botha warns that postponing parenthood may cause a financial "bottleneck" later in life if you don't have a well-rounded financial strategy that takes into account both your current and potential future circumstances.

For some people, it could be financially beneficial if you used your time before starting a family to build a good financial foundation. Botha recommends considering the following:

Balance out financial demands

Balancing competing financial demands can be a daunting task, and effectively managing your priorities is crucial. It's not uncommon for individuals in their 50s to grapple with saving for their retirement as well as their children's tertiary education costs.

For instance, in times like these, where both goals seem equally pressing, it can be hard to determine which one to prioritise.

Picture by Josh Appel/Unsplash

According to finance expert, Botha, it's best to give priority to your retirement savings. However, this does not discount the need to come up with a plan to save for your child's education, which should be tackled alongside your retirement savings.

To help navigate this tricky financial balance, seeking professional advice from a financial adviser may be the best course of action.

Black tax

It is common for South Africans to worry about the black tax, providing financial support to extended family members such as parents, grandchildren, nieces, and nephews.

To avoid this impacting your financial and emotional health, you need to factor this future possibility into your financial planning.

An unexpected death and what it means for your family

If you pass away unexpectedly, your family may face financial hardship. Therefore, it is imperative that you make plans for the future of your family if something were to happen to you. Income protection, life insurance, and critical illness and disability coverage are particularly necessary.

Draw up a will

Making a will, which should name guardians to take care of your children, is also essential. Keep in mind that your parents and even your siblings might not be able to assume this job due to their age.

Retirement

Your retirement savings need to be preserved, at all times. Women sometimes take a few years off work to raise a family and may be very tempted to cash in their retirement savings to cover extra costs.

Botha warns against this, saying that retirement savings should rather be transferred to a preservation fund to have more time in the market for compounding to work its magic. You may struggle to catch up with the backlog should you decide to re-enter the job market later.

“If you postpone parenthood for whatever reason, the most important factor to bear in mind is that your planning timelines will be different from those of people who have children at a younger age. It is essential to consult a professional financial planner who can help you draw up a personalised financial plan taking your specific needs and circumstances into account,” advised Botha