Amanda and her husband made peace with how they thought their lives would look. Married for 17 years without children, they weren’t careless with money — but they didn’t have a solid plan for retirement. In fact, they have $0 in retirement savings.
Then last summer, everything changed. At 42, Amanda unexpectedly became pregnant. While the couple was happy, the pregnancy also caused some financial stress. Her husband, 48, earns about $90,000 a year, while Amanda quit her job midway through her pregnancy and is now a full-time stay-at-home mom and will be there for at least the next three years. And the couple has no debt other than their home mortgage — about $130,000, of which $300,000 is already in equity.
With a newborn and only about $30,000 in emergency savings, Amanda says she feels like she’s starting from scratch and worries it might be too late to catch up on her retirement plans.
“I feel like I’m at ground zero,” she told the Ramsey Show host when asked where to start when retirement planning and parenthood suddenly collide (1).
Amanda’s concerns are not unique. The cost of raising a child has risen in recent years and for parents who did not expect to have children, the financial shock can be excruciating.
A recent LendingTree study found that the annual cost of raising a child from birth to age 18 now averages $297,674. This number is a staggering 35.7% higher than in 2023 (2). For aging parents, these expenses often overlap with key retirement savings years. Instead of building a regular nest egg in your 40s and 50s, child-rearing expenses can take money out of retirement savings for diapers, bottles, child care — even education planning.
Amanda feels pressured, especially as she has chosen to be a stay-at-home mom to earn a regular income. While she is likely to eliminate childcare costs, with only one income and a short retirement path, every dollar the couple needs to work.
Amanda asked the host if she and her husband should sell the family home to raise the proceeds towards those financial goals and both hosts cautioned against that approach, saying it would be like “robbing Peter to pay Paul”. But the hosts had good news for Amanda: a late start doesn’t mean they won’t retire. If she and her husband save $2,000 a month, the husband’s full retirement age by age 67 will be over a million.
“The best time to start saving is now,” host Rachel Cruz told Amanda (1).
The host also emphasized the emotional impact of major life changes.
They suggest that parents — and anyone facing a major life change affecting their finances — redefine their outlook on life. Instead of going back to that “old” life, focus on moving forward and making the best of your current situation.
“The couples I see are good – ‘Oh, we’re having a baby at 42 and 48’ – right? Who can go through the cycle at the end of that old life and not try to get it back but to create something completely new,” says COS Dr John Deloney.
The truth is that life rarely follows a straight line. Unexpected changes don’t just come in the form of an unexpected pregnancy. Health issues, the breakdown of once-iron-clad relationships, job losses, caring for aging parents and the economic crisis can all derail even the best-intentioned plans. When these disorders occur later in life, the margin for error is less, but you still have options.
Remember, financial planning isn’t just about having $500,000 in retirement at 50 or paying off your mortgage in 15 years instead of 30. It’s about building a resilient financial foundation so you can navigate life’s unexpected challenges.
Read more: The average net worth of Americans is a staggering $620,654. But it makes almost no sense. Here’s the number that counts (and how to make it skyrocket)
When saving for retirement, starting young is the simplest way. But we each start from where we are – which is here right now. Whether you’re 20 or 60, if you haven’t started saving for retirement, here are practical steps to get started:
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Maximizing available benefits: Many jobs offer matching retirement savings. Even just a few hundred dollars a month can grow into hundreds of thousands with a match and enough time.
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Start small, but be persistent: Even modest monthly savings can grow over time thanks to compounding benefits.
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Consider spousal IRAs: If a spouse does not work, they may qualify for a spousal IRA. This can protect the non-earning spouse’s retirement savings.
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Save the basics first: Even if things are tough, keep an emergency fund to avoid new debt when unexpected expenses arise.
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Modify your lifestyle: Families may need to redefine what “fun” looks like during high-spending years, freeing up cash for long-term goals. Look for inexpensive recreational options, such as hiking or camping.
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Search for community resources: Many societies offer support for parents and carers. Look for senior centers if you care for aging parents or parenting groups if you have young children.
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Expanding income: Having multiple income streams makes it easier to create a flexible, flexible financial plan. Whether that means being a stay-at-home parent watching other kids, earning a side hustle or you taking on night gigs, find other ways to earn income.
Life doesn’t always go as planned. But with strong financial footing and a resilient mindset, you can be prepared no matter what life throws your way.
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Ramsey’s Show Highlights (1); Lending Tree (2)
This article provides information only and should not be used as advice. It is provided without warranty of any kind.
