7 Tips to Financially Prepare for Having Children in Your 40s

If you're considering having children in your 40s, you're in good company. It turns out that more women are waiting until later in life to have children. In fact, in 2022, the birth rate for women ages 40 to 44 was 12.5 births per 1,000 women, a 4% increase from 2021—and part of a growing trend for nearly 40 years.¹

While there's a lot of joy in having children, there are particular financial considerations with starting in your 40s, including paying medical costs, planning for parental leave, caring for children and aging parents at the same time and juggling the costs of raising a child with other financial priorities. Let's take a look at how to prepare on the money front for this life-changing, milestone event.

1. Review Your Health Insurance Coverage

If you're 40 and up, seeking fertility treatments to have a pregnancy is likely on your radar. That's because, by 40, the odds of someone getting pregnant naturally is only 5% per menstrual cycle.² Whether you're considering in vitro fertilization (IVF), surrogacy, artificial insemination, fertility testing or drugs to improve ovulation, the cost of having a child can rise significantly.

See what services, medications and procedures your health insurance might cover. Otherwise, expect to pay out of pocket for everything from visits with fertility specialists and medications to treatments, testing and embryonic storage. How much you're paying depends on your situation, where you live, your insurance plan and your healthcare providers. To give you a rough idea, the cost of a single IVF cycle—which includes ovarian stimulation, egg retrieval and embryo transfer—can cost anywhere from $15,000 to $30,000 in the U.S.³

2. Understand Adoption-related Expenses

If you're considering adoption, understanding how much it costs to adopt can help you budget and prepare for these expenses to grow your family. In the U.S., there are four main options to adopt a child:⁴

• • Federal adoption, which is adopting from the public child welfare system
• • Adoption from a private agency
• • Independent adoption
• • Intercountry adoption

Adoption fees commonly include agency fees, court and legal fees and social work services to match a child. Also be prepared to cover travel costs to meet with a child, and pre-adoption and post-adoption counseling.⁴

If you're considering working with a private agency, expect to pay anywhere from $30,000 to $60,000 for adoption.⁴ Note that a federal adoption generally costs less; plus, you might be eligible for a one-time government subsidy.⁴ To prepare for the costs, it can be a good idea to squirrel away funds into a high yield savings account that can eventually be used to cover adoption expenses.

3. Plan for Parental Leave

With so much change in your domestic life, setting up a cushion of funds can help you adjust and enjoy those first few months with the new addition to your family. If you can, set aside money early on in a savings account. That way, you'll be in a more comfortable spot once the baby or child arrives in your home.

You'll also want to allocate some money to cover any income loss if you take parental leave. To figure out how much you need to save, see what your employer offers for parental leave, and their policy on supplementing your leave with sick days or paid time off. Depending on your workplace, you might qualify for Family and Medical Leave, which usually provides anywhere from 6 to 12 weeks of fully or partially paid leave to bond and care for your child.⁵

4. Prepare for the Rising Cost of Childcare

The cost of childcare can vary depending on the age of your child, where you live, the frequency of childcare and whether you're considering an in-home nanny, home-based provider or daycare facility.

So how much are we talking about? According to the U.S. Department of Labor, the cost of childcare can range from $5,357 to $17,171 a year, or roughly $446 to $1,431 a month.⁶ That's a major expense, and something you'll need to factor into your budget.

5. Start Saving for Education Costs

Higher education comes with a hefty price tag, but the earlier you start saving for a child's education, the easier it will be to send them off to college—and avoid racking up too much to fund their education.

So, how much does it cost to send your child to college? For the 2021-2022 school year, the average cost of tuition and fees at public institutions was $9,700. For private, for-profit institutions, you're looking at $17,800.⁷ That doesn't include the cost of room and board, school supplies and other college-related expenses.

Setting up an automatic savings plan can help make the cost of college more financially manageable. You can stash money in a savings account like Synchrony Bank's custodial account. Once you open the custodial account for your child, you'll have full control over it, and you can save the funds for education expenses.

Another option is to open a 529 plan. These are tax-advantaged college savings plans—when the money is used toward eligible education-related expenses, you won't be taxed. Another benefit? Many states offer a tax deduction or credit for your 529 contributions.

6. Build an Emergency Fund

Ensuring that your emergency fund is well-stocked can help you handle whatever unexpected expenses come your way—a sickness, urgent medical care or perhaps a gap in your cash flow.

It might be tough to figure out the appropriate size of your emergency fund. That being said, it's generally a good idea to aim to save three to six months of basic living expenses. To get started, consider establishing a rainy day fund in a high yield savings account. You can grow your savings with a competitive interest rate on deposits, but still have easy access to the funds.

7. Adjust Your Budgeting Strategy

Besides factoring in the additional costs of starting a family in your later years, take stock of your current financial state. This includes creating a budget that encompasses immediate baby-related expenses. There are also the added costs of childcare, family healthcare, food and housing. You might need to bump down expenses in other areas, such as extracurricular activities or family vacations, to accommodate these new expenses.

Once you have a budget in place, review your existing financial plans to carve out space for the new expenses. How will you juggle different (or competing) financial priorities? Will it take longer to pay off your mortgage or save for retirement? Or perhaps you'll need to find ways to earn more money to adjust to shifts in your finances.

Create Greater Joy and Security by Taking Steps Today

At any age, there's joy and anticipation in having children. And by doing your research and putting financial plans in place, you can help secure a stable future for your children.

 

Jackie Lam is an award-winning, L.A.-based money writer whose work has appeared in Salon.com, Refinery29, Time, Forbes, CNET, Business Insider and BuzzFeed, among others.

 

READ MORE: The High Cost of Family Leave

 

Sources/references

1. Hamilton, B.E., Martin, J.A. & Osterman, M.J.K. Births: Provisional Data for 2022. Centers for Disease Control and Prevention. June 2023.

2. Benisek, A. Pregnant at 40: What to Expect. WebMD. February 14, 2023.

3. Conrad, M. How Much Does IVF Cost? Forbes. August 14, 2023.

4. Planning for Adoption: Knowing the Costs and Resources. U.S. Department of Health and Human Services. June 2022.

5. Paid Leave in the U.S. KFF Women's Health Policy. December 17, 2021.

6. Landivar, C. New Childcare Data Shows Prices Are Untenable for Families. U.S. Department of Labor. January 24, 2023.

7. Tuition costs of colleges and universities. National Center for Education Statistics. August 4, 2023.