What is the ideal age to have a baby, financially speaking?
The most recent USDA report noted that "a middle-income family with a child born in 2013 can expect to spend about $304,480 adjusted for inflation on food, housing, childcare and education, and other child-rearing expenses up to age 18." This figure does not include costs that parents incur after the age of 18. (Hint, hint: college)
A recent Time article compared two couples at different ages and different stages of their careers. They wanted to know whether the cost of a baby varies depending on the age of the parents.
The first couple, ages 26, makes a combined annual income of $76,000. They have student loans and some credit card debt. The second couple, 36, makes a combined income of $120,000. They have a small amount of debt and are almost done paying it off. This couple also has $15,000 saved up for in vitro fertilization. Smart pair!
The article looked at the advantages and disadvantages the two couples would have in a few key areas.
Taxes: The younger couple benefits, because the lower tax bracket means they can take advantage of things like the earned income tax credit, which allows families under a certain income level to pay less in federal taxes or even receive a refund based on the number of kids in the house. The older couple makes more and is not elegible for the EITC.
Retirement: The older couple benefits because they had a great head start at investing in their retirement plans before having the responsibility (and expense!) of a child.
Saving for College: The older couple also has an advantage, because they have more disposible income to save. On the other hand, the younger couple could potentially take advantage of tax credits like EITC and the American Opportunity Tax Credit, which helps with college expenses.
Childcare: The findings here are fascinating. The younger couple might have the advantage of still having parents to provide childcare. The researcher noted this could greatly reduce childcare costs through the years. Date night? Call Grandma. Who needs day care when there's Grandma? "Child Care Aware found that grandparents were the second most popular form of childcare: 32 percent of those polled take advantage of their own parents' help. "
Shockingly, the researcher determined that, after weighing all the costs, the 26-year-old couple had a slight advantage over the 36-year-old couple. One of the reasons for this is the reduced childcare cost and the potential for income increases that is more likely to happen to the younger couple. They considered the fact that millennials are used to being more frugal than their Gen X counterparts, who are more prone to a phenomenon known as "lifestyle inflation," a part of growing up and getting older that allows some to live more extravagantly.
This article poses questions about the conventional middle-class lifestyle, wisdom that has long concluded waiting to be older and more financially stable was the best way to secure positive financial outcomes for you and your offspring. But now that we know that this isn't the case for everyone, you go ahead and have that baby and maybe even that next baby (as long as you have Grandma to babysit).
While there is no ideal age to have a baby, those of us who are research- and data-driven are in a constant state of confusion over conflicting reports about the best way to go. Of course, we all know that the best way to know if you are ready for a baby is if you are willing to forsake sleeping in on weekends for the rest of your life.