These days, late-in-life parenthood is not just a personal choice; it’s a common trend. Many couples choose to delay parenthood, and grandparents are stepping in to raise grandkids. Being an older parent has advantages — including greater emotional maturity and financial security — but retirement planning for late-in-life parents also presents unique challenges.

Here’s a look at some of the financial challenges you may face as late-in-life parents and strategies for balancing your family’s financial needs with your retirement savings needs. By taking proactive steps and developing a comprehensive retirement planning strategy, you can secure your financial future and that of your children or grandchildren. Seeking help from a financial advisor is also advised.

Retirement Planning Challenges for Late-in-Life Parents

As a late-in-life parent, you may find yourself struggling to balance the costs associated with raising children while saving for retirement or meeting financial responsibilities in retirement — especially at an age when you should be prioritizing retirement savings. Some of the challenges you may face include:

Increased Expenses and Reduced Income

You may have to prioritize your family’s current financial demands, such as housing, food and childcare, at the expense of long-term retirement savings. This is a significant consideration, given that estimates indicate that child-rearing expenses could cost between $174,690 and $372,210 per child from birth to their 18th birthday.

Additionally, suppose you or your partner take time off or reduce your work hours to care for your children. In that case, you may experience reduced income and decreased retirement savings contributions.

College Savings vs. Retirement Savings

The cost of college is also something to consider since the average 2023-2024 school year ranged from $10,662 a year for a public in-state school to $42,162 for a private out-of-state school. You may feel pressured to save for or cover your children’s college expenses, sacrificing your own comfortable retirement.

The Financial Burden of the Sandwich Generation

Sandwich Generation parents, typically aged 40-59, often care for both their children and aging parents while trying to maintain their financial goals. According to AgeWave.com, 62% of people aged 50+ provided financial assistance to adult children, grandchildren, parents or siblings within the last five years.

And if you expect or feel obligated to pay for your children’s weddings, you may do so after leaving the workforce, which could prove difficult on a fixed income.

Healthcare and Insurance Concerns

If your family is covered by an employer’s health insurance plan, you may find it more affordable to stay with your employer rather than pay for alternative health insurance for your kids.

Life insurance can also be a critical expense for older parents. At this stage of life, there’s an increased chance of leaving your family in financial jeopardy should something happen to you or your spouse, and you don’t have coverage.

Strategies for Balancing Late Parenthood and Retirement Savings

Having children later in life can significantly impact your retirement timeline, as the financial demands of raising a family may coincide with your peak earning and saving years. However, while challenging, balancing the financial demands of raising children later in life with your retirement goals is not impossible.

Working with a financial advisor is the best way to maintain that balance. An advisor can help you develop a comprehensive retirement plan for your situation as a late-in-life parent.

The following strategies can also help you maximize retirement savings during the final few decades leading up to retirement. If a financial advisor can guide you through these, all the better.

Prioritize Retirement Savings Over College Savings

While it may be tempting to focus solely on your children’s future, remember that there are no loans or scholarships for retirement.

Ensure that you are consistently contributing to your retirement accounts. If your budget allows, contribute to your retirement account and your child’s college fund simultaneously.

If you don’t have an IRA, you may want to consider one and explore using it to pay for your children’s educational expenses if you’re in the financial position to do so. IRAs allow for penalty-free withdrawals to cover many college costs. Also, explore 529 college savings plans to see if starting one makes sense.

Take Advantage of Catch-Up Contributions

If you are over 50, retirement account catch-up contributions allow you to increase savings while potentially offsetting any effects associated with having children later. For instance, in 2024, you can contribute an additional $1,000 over the annual contribution limit to an IRA and an additional $7,500 to a 401k.

Set up automatic contributions to your retirement accounts for consistent savings. It can help you avoid the temptation to divert funds elsewhere.

Explore Alternative Income Streams

If it makes financial sense for one parent to leave full-time employment rather than pay for childcare, opt for part-time or remote work. Search for employment options that allow you to balance work with family responsibilities while earning an income. You likely have valuable skills and experience that can be monetized through consulting, freelancing or starting a small business.

Even if you can work full-time, you may want to consider starting a side gig that can provide an additional source of income.

Downsize Your Home

Consider a move if you’re living in more space than your family needs. People typically upsize their living space (and living expenses) once they start a family. However, a smaller home may free up considerable funds for retirement savings.

Minimize Debt

Make a plan to pay off your debt to prevent funds from being diverted away from retirement savings and instead into high-interest debt payments like credit card balances. And make sure you have an emergency fund that can help you cover unexpected expenses and avoid accumulating additional debt.

Related: The Importance of Managing Debt as You Near Retirement

Consider Working Longer

Postponing retirement will give you more time to save, reduce the years you have to fund and could even lead to increased Social Security benefits. If you’re supporting minor children as you approach retirement and are physically able to continue working until full retirement age, it may be financially beneficial to do so.

Related: Reasons You Should Work Past Retirement Age

Ensure Enough Life Insurance Coverage

It’s important to consider investing in a life insurance policy to ensure your children are financially protected if you pass away or lose the ability to work. A policy with “living benefits” may allow you to access a portion of your death benefits before your death under certain circumstances, such as a terminal or chronic illness.

Keep Aging Parents in Mind

You may also want to protect your aging parents by purchasing a life insurance plan on their behalf, especially if a parent’s passing will mean financial support from you for your other parent.

As your parents age, you might find yourself providing financial support or caring for them during your own retirement years. To prepare for this possibility, have open conversations with them about their retirement plans and savings so you’ll have some idea of what support, if any, they may eventually need.

Have an Estate Plan in Place

As an older parent, estate planning becomes increasingly important to ensure that your children are financially protected and your assets are distributed according to your wishes. At a minimum, you should have a will, but you also may wish to consider setting up a trust to provide for your children.

Engaging the services of an experienced estate planning attorney can help you create a comprehensive plan that addresses your family’s unique needs and goals.

Related: Why and How To Put Your Legal and Financial Affairs on Autopilot

Retirement Planning for Late-in-Life Parents Is a Balancing Act

Navigating the challenges of retirement planning while supporting a growing family can be daunting. However, by understanding the unique challenges that come with having children later in life, you can develop a comprehensive retirement strategy that takes into account your family’s needs and your long-term financial goals.

Seeking guidance from a financial professional can help you navigate this complex landscape and ensure a more secure future for both you and your children.

Related Articles

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• Common Estate Planning Mistakes and How To Avoid Them
• End-of-Life Planning Everyone Needs To Do

Reviewed May 2024

About the Author

Andrea Norris-McKnight took over as the editor of The Dollar Stretcher and After 50 Finances after working for the previous editor for almost 15 years. She has also written for Money.com, GOBankingRates.com, HavenLife.com and The Sacramento Bee.