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Financial Planning for Delayed Parenting

12 April 2023

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, says Farzana Botha, Product Specialist at Sanlam Savings.

People are delaying having children for various reasons, among them career aspirations, deferred marriage or long-term partnerships, the desire for more financial security and greater emotional maturity, and the wish to pursue other interests such as travelling. While this certainly has advantages, Botha says delaying parenting could lead to a financial ‘bottleneck’ later in life unless you have drawn up a well-balanced financial plan that considers both your present and potential future circumstances.

Building a Good Foundation

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.

  • Managing your financial priorities may be challenging. You will need to create a balance between competing financial demands. If you have children in your 50s, your children’s requirement for tertiary education may come at a time when you are thinking of retiring, for example. Which do you save for first? “Retirement savings should be your priority but saving for your child’s education should also happen according to a plan. Working with an adviser can help you balance these priorities,” says Botha.
  • You could become part of the ‘sandwich’ generation. Many South Africans provide financial support for extended family members such as elderly parents, grandchildren, and nieces/nephews. To avoid this impacting your financial and emotional health, you need to factor this future possibility into your financial planning.
  • If you pass away unexpectedly, your family may face financial hardships. As you get older, health issues are more likely to surface. It is therefore crucial that you should plan for your family’s future in the event that something might happen to you – income protection, life insurance, and critical illness and disability cover are especially important. Drawing up a will is also crucial, which should include the appointment of guardians to look after your children. Remember that your parents and even your siblings may be at an age where they won’t be able to take over this role.
  • 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.

Most Importantly, Plan Ahead

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

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