The pressures of building a career and then saving for a deposit on a home are key financial reasons why so many mothers put off having a child until their mid or late 30s. But starting a family at that age brings its own financial complications – especially around mortgages, pensions and life insurance.
Emma Sterland, financial planner at Saga Investment Services, says she is “seeing increasing numbers of customers who have had children in later life and are having to shift their financial priorities around”.
As Patrick Connolly of financial advisers Chase de Vere says there are “increased challenges”.
“Somebody giving birth at 40 is likely to have a financially dependant child until they are in touching distance of retirement.” he says. “If they’re not focusing on their own retirement planning, this gives very little time to make up lost ground.”
Life insurance costs more as you get older. If you buy £100,000 worth of cover at age 25 the monthly cost is £5.33, but at 45 that more than doubles to £11.21, according to figures from Saga.
The cost of housing has been a major factor in the number of women giving birth later. A recent survey by the British Pregnancy Advisory Service found more than a third of women who were putting off starting a family saw the fact they did not own their own home as a barrier.
But if one of the partners is much over 40, mortgage options begin to shrink. Lenders typically won’t approve loans that run past 70 or, in some cases 75. At the same time, they will reduce the amount of money you can borrow as they will assume a chunk of your income is going to pay for childcare.
A 40-year-old couple living in a two-bed apartment when the first child comes along, may be able to cope with the space restraints at first, but if, at 50, they try to buy a home with a garden, they will be limited to a 20-year term by the likes of NatWest and Barclays which have ceilings of 70. That means a £200,000 mortgage at 3% costs £948 a month when it is repaid over 25 years, but jumps to £1,109 over 20 years.
Financial advisers also generally recommend that homebuyers pay off their debts before they hit retirement, when they will potentially see a steep drop in income. Having a large mortgage late in life seriously hampers how far an individual can build up a pension. Many people in their 50s opt to pay “additional voluntary contributions” to boost their pensions, but this is virtually impossible if a couple have a large mortgage and are paying childcare.
Grandparents of older mothers and fathers may be retired and thus able to help with childcare. But the older the parents, the older the grandparents who may then be unable to help.
However, it is not all bad news. Research has shown that mothers who start a family before they hit 25 tend to face a bigger pay gap when they return to work.
Childcare before pension
Kate Noble Jones, 38, has two children – Finnian, three, and Nina 10 weeks – with husband Tim. Putting off children until later helped her career, but has left the couple struggling to build a proper pension.
“Tim and I have been together since 2002. We were doing a lot of travelling and living the high life in London. We’d go away for two months a year for my travel photography. It wasn’t that I was thinking career, career, career, although that was what I was doing. I actually didn’t feel ready.
“I feel really lucky to have Nina regardless of my age. But it makes me sad that I’ve had a child this late and that it rules out really having any more. It’s really tiring. If I had done it 10 years earlier, I would have had more energy. All these sleepless nights make me feel older. Physically, I was more ready then, but emotionally I wasn’t.
“We have set up bank accounts [for the children] but we haven’t set up anything to fund their futures. We think we should, but we haven’t got round to it. I pay minimal payments in to my pension because I’m not working. Tim pays into a joint pension. But we’ve cut down on the payments because of childcare costs.
“We don’t get that ‘grandparent one-day-a-week’ help. Tim’s parents live in France. We relocated to my home town of Folkestone to be near my dad, so hopefully he’ll be able to help out.
“We moved out of London because we’ve been priced out and didn’t want to compromise on where we lived. We bought our flat in Brockley at the end of 2006 and lucked out because it has become quite trendy. But in a way we haven’t, because we can’t afford a house there, so that’s why we’ve moved. We’ve made enough money on the flat to keep it, remortgage it, rent it and use the money to buy in Kent.”
Sorting out the priorities
Rachel Drouet, 43, lives with Ted Edwards, 51, and daughter Ruby, three.
“I met my partner Ted when I was 32. He was already supporting two children from his previous marriage, so baby plans were very much on the back burner. When I turned 38, and Ted’s maintenance bills had tailed off, I thought ‘I’m going for it’.
“The minute you’re pregnant and over 35, they mark you down as ‘elderly primigravida’ – it’s a horrible word meaning old mother and you’re put under consultant care. You already know you are going to be an older mother. You’ve done your soul searching. You have to think about how you’re going to feel at the school gate; how you’re going to feel about physically keeping up and you work out numbers like ‘when my child is 40, I’ll be 80’.
“Going part-time has made a difference to our lifestyle. But, because I’m an older mother, I’ve had a lot more years to save and to be in a financially secure position. As soon as we made the decision about having a child I put money aside.
“We’re not going to have another baby. Aside from the additional health risks, I don’t think we could afford it. Our outgoings are £2,700 a month. £350 0f that goes on childcare. We couldn’t easily increase our mortgage due to age, so moving house is off the cards.
“What worries me the most is something happening to me while she is still young and me not being there for her.
“I think I will carry on working until I’m 65. I am paying £100 a month in to a pension. I know I should pay more if I want a decent lifestyle when I retire. But our money goes on other outgoings that are more important.
“Again, it’s one of those things that you have in the back of your mind about being sensible – but we’re worrying about the immediate stuff.”
Interviews by Juliet Stott
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