Having a baby later in life

Later-life babies are no longer uncommon. The latest Office for National Statistics figures show that around 31,000 babies in the UK are born to mothers 40 and over each year, more than triple the number in 1990¹.

Late motherhood has many drivers. Daniel Craig and Rachel Weisz, who welcomed a baby girl in 2018, were both over 40 by the time they married, with children from previous relationships. The Oscar-winning actress and James Bond star probably didn’t have to re-think their finances significantly, but most people will need to give some thought to how a baby affects their long-term financial plan. You may have a few more evenings at home now you’re preparing for a baby, so take the opportunity to build a picture of your finances, work out what you will need and your options.

Babies may be small, but they come with big bills. There may also be costs associated with buying a bigger house, moving to an area with better schools and potentially school and university fees. For some couples, this may come on top of expensive fertility treatment. A recent survey showed that the average cost of raising a child to 18 is £160,692 for a couple and £193,801 for a single parent².

Education, even when provided by the state, comes at a cost. Some parents are prepared to pay a premium of up to £83,000 to live in the catchment area of a high-performing school³.  If parents want to go down the private route, the average annual fee for day pupils has increased from £9,579 in 2008⁴ to £20,480 in 2023⁵.

And without wishing to labour the point, childcare is also expensive. A day nursery costs an average of £270 (50 hour week for a child under 2), while a live-in nanny working 50 hours a week will cost on average between £350 and £650⁶. So be honest about how much it is likely to cost and adjust your expectations accordingly.

Taking a career break at any time can be disruptive to finances. Older parents will often have more financial security than younger parents. They will generally be well-established in their careers and in their peak earning years, have their own home and be closer to paying off a mortgage, and have paid off student debt. These are real advantages.

However, that doesn’t mean a career break won’t have implications. In particular, it can dent your pension contributions. Check what your employer will pay. Some employers may back-fill contributions at pre-maternity rates or missed contributions once a woman returns to work.

If possible, try to keep your personal pension contributions going while you’re on maternity leave. In your forties, you may have another 20-25 years of growth on those contributions which could make a meaningful difference to the size of your retirement pot when you come to access your pension.

You’ll need to balance your short-term financial needs, whilst ensuring you’re financially secure for the future.

If you can put something aside in an ISA you’ll get some valuable tax benefits to help your money go further. Plus, you’ll have the flexibility to access your money when you need to, which can be useful for education costs. You may want to consider a Stocks and Shares ISA which allows you to invest in a wide range of investments such as individual shares, exchange-traded funds and investment trusts. Find out more about investing and the benefits of a Stocks and Shares ISA.

It’s also important to continue paying into your pension to ensure you can afford the lifestyle you want in retirement. It may be that you or your partner are already 55 or over, the age at which most pensions can normally be accessed, although this is due to rise to 57 on 6 April 2028, unless you have a lower protected pension age. This means you’ll also have the option of taking up to 25% tax free cash, which could help with some of the additional expense, but it’s important to understand that what you take now will affect the size of your pension income going forward - so make sure you don’t leave yourself short.

If you’ve built up multiple pension pots, now may also be a good time to take the opportunity to transfer them into a Self-Invested Personal Pension (SIPP) where you can see and manage your pension in one place. Please note, if your employer is paying into a current workplace pension, consider leaving that pension where it is or you may lose contributions from your employer. Having a single plan will help you keep on top of your retirement savings and ensure you stay on the track for the future you want. If you’re thinking about transferring a pension, please read our pension transfer factsheet.

If you have some spare cash a Junior ISA or Junior SIPP are both tax-efficient ways to start building a nest egg for your children. You can start a regular savings plan from as little as £25 a month, with friends and family able to contribute too, ensuring your children have a good financial start in life and understand the value of regular savings.