Children ruin retirement prospects

Happy familyPA

If you ever want to be able to afford to retire, don't have children. A new report from Standard Life reveals that those who have the massive financial drain of a family have saved less and expect to work far later than those without kids.

So can any of really afford to breed?

Saving less

The survey found that it hampers our ability to put money aside. Some 49% with two children in the household have no financial plans to provide for the future, compared to 35% without children.

This is hardly a huge shock. Having children is the most alarmingly expensive thing anyone can do. It's not just the clothing and feeding and putting a roof over their heads, there's also the huge financial impact of one of you taking time off to have them and then look after them. It's a wonder that anyone can manage this without going broke.

Standard Life has done the maths on this. A woman saving £150 a month, increasing annually in line with price inflation from age 20 to age 65, could have a pension fund of £559,000. Taking a 5-year career break from age 30 during which pension contributions stop reduces the pension fund to £480,000 - a decrease of over 14%. If you work part-time and half your contributions from age 30 onwards this reduces the pension fund to £380,000 - a decrease of over 31%.

The figures still seem huge, but don't be lulled into a false sense of security, once they have been translated into a monthly income through an annuity they will seem decidedly less pleasant.

And this ignores the fact that the other end of childhood recently became dramatically more expensive. The huge rise in university fees means that if you want your children to start life without a massive millstone of debt, there's every chance that another five years will go by where you cannot afford to make pension contributions.

Retire later

As a result, over one in ten of those who haven't yet retired and have two children in the household don't think they'll retire until they are over 70 - compared to only 3% without children. It stands to reason really. If you spend a decade or more making massive financial compromises for the sake of your family, your pension is going to suffer. So it only makes sense that you're going to have to add a decade onto the end of your working life in order to be able to save up sufficient funds.

And I hate to be the bearer of bad news, but if you have kids and they have kids of their own, then your retirement is going to be no picnic either. One in three people with kids say they will make up for lost time and spend their time travelling the world. However, will they be allowed to? Surely their kids will demand immediate free babysitting. You'll end up looking after pre-schoolers for roughly the same amount of time as if you'd started again yourself.

Perhaps it's not surprising that the same figures found that only 27% of those with two children intend to stop working entirely at some point. It's just hard to know whether they recognise that their family will always be hard work, or whether they have a cunning plan to escape from them every once in a while.

What can you do?

The company says that things don't have to be so bad. It has suggested ten steps that mean even those with children should eventually be able to afford to retire... eventually.

1. Don't panic!
2. Seek professional financial advice
3. Continually review your financial goals
4. If you don't have one, make a plan. For tips, please visit
5. Ask for a state pension forecast (and calculate your state pension retirement age) Go to:
6. Review your investments
7. Consider deferring taking the state pension at your default retirement age - for every year you defer taking benefits you can increase the pension by 10.4%4
8. If you have moved jobs, ensure you have kept your old employer up to date with address changes so you can claim any workplace pension when you retire
9. If you can, increase your savings
10. If you're a higher rate tax payer, ensure you claim the tax-relief. Standard Life estimates 300,000 people are not claiming this currently
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