Beware unexpected costs of putting off starting a family

Many people are starting their families later on in life for all sorts of reasons – whether it’s related to money, careers, relationships or health and fertility.

Older parents of young children may risk neglecting their pension provision. Picture: PA

Older parents may find some financial advantages to having children a little further along, such as being higher up the property ladder or more established in their career, with greater security and negotiating power around flexible working.

But there could also be some extra financial hurdles for older parents.

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Sarah Coles, personal finance analyst at Hargreaves Lansdown, says the age at which you choose to have children is “nobody’s business but your own”, but adds that “if you’re planning a baby in your 40s or 50s, there are some extra financial issues to consider”.

Here, Coles outlines 10 of those financial considerations.

 Take care over extra borrowing. For older parents, a bigger mortgage may mean carrying debt into their 70s, or the risk of approaching retirement with non-mortgage debts left to repay, both of which could have a big impact on their disposable income in retirement.

 Remember your pension. The “empty nest” period will come later in life – giving you less of an opportunity to focus on building retirement savings. It means you may need to keep up consistent pension payments throughout as much of your years as parents as you can.

 Consider university costs – which can be considerable, even with no tuition fees – sooner rather than later. One option is to put money aside in a Junior Isa, which will ensure the money is safely tucked away tax-free to the age of 18. You can contribute up to £4,368 this year into a Jisa.

 Talk to your own parents about later life care. It’s worth knowing in advance the provisions your parents have made in case they need care as they get older, and the part they expect you to play. If you have young children and parents with care needs at the same time, find out about the resources available to help.

 Have a childcare “plan B”. Some grandparents are keen to pitch in with childcare into their 80s – but some will feel their childcare days are behind them. Others may find their health isn’t good enough. If they’re unable to pitch in, it’s better to put a plan in place early and try to find affordable care.

 Plan for the worst-case scenario. This necessity becomes more pressing as you get older. Life insurance can help protect children if parents die, and critical illness cover and income protection provide support if parents suffer an illness or injury. You may want to have details of who would take care of your children included in will planning.

 Factor in the high-income child benefit tax charge. Older parents may be closer to their peak earning potential, and one parent may earn more than £50,000 – the point at which some child benefit may need to be repaid. You can choose not to apply for child benefit, but if one of you isn’t working, ensure you’ll still receive national insurance credits towards your state pension by completing a form.

 Talk to your employer: If you’re at management level, you may be setting a precedent in your company as a boss by asking to work shorter or more flexible days. Pre-empt any potential problems and build solutions sooner rather than later.

 Factor in any additional expenses when starting a family. If fertility treatments are needed they can be costly, so consider the implications, particularly if it means starting parenthood in debt.

 Make plans for your children’s property dreams. For older parents, re-mortgaging to help their children on to the property ladder may not be practical, as it could make it harder to clear debts before retirement. Over-55s may be able to help by dipping into their pension pot, but this will have implications for their income for the rest of their life.

If you expect to help your child on to the property ladder, it’s worth making plans for how you’ll achieve this without making painful sacrifices later on.