Your Retirement and Starting a Family

Your Retirement and Starting a Family

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Will the addition of starting a family affect your retirement readiness?


The Center for Retirement Research at Boston College reports parenthood could be putting retirement at risk. With the addition of children, changes in household spending will happen. The added expenses of food, clothing, childcare, and education can impact your retirement readiness. (1)


The Center for Retirement Research at Boston College utilizes the National Retirement Risk Index (NRRI) to gauge the impact of having children on the retirement security of current older working households.


To reach the NRRI, households’ projected replacement rates (retirement income as a percentage of pre-retirement income) are compared with target replacement rates that would permit them to maintain their standard of living. As of 2013, the NRRI found half of households were at risk of falling short in retirement. Because of this, it’s important to make a strategy when saving for retirement and starting a family. (1)


It’s not just the increase in spending that can cause your retirement harm. In fact, additional money may be lost to parents taking an absence from work to be with children – with this absence usually taken by the mother. Additionally, even when the mother does work, she tends to make less than women without children. Because there is the possibility of less involvement in the labor force and less money, households can experience a loss of income. (2)


Furthermore, middle-income households experience the greatest increase of risk in their retirement readiness with the addition of children by 2.5%. (2)


With the increase in spending and loss of wages, it’s important to implement strategic financial changes to household spending with the addition of children.


Check out the infographic below to see ways families can strategically keep up with retirement readiness while having children.


You can also download the infographic here.


Your Retirement and Starting a Family


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