The trend of Millennials not having babies is beginning to shift. (Just look at one of the most famous Millennial couples, Will and Kate. They're not your typical “Poster Children,” but a great example of the new Millennial movement toward child-bearing).
Goldman Sachs just released a new report, which indicates that the pickup in the economy has influenced Millennials to start having kids. Approximately 90% of all new mothers in 2014 were Millennials, a significant increase over a decade ago in which only 50% of all new mothers were of the same age range. CBS News also reported, “Most new mothers are now millennial moms, and the most populous group of that generation – now 23-26 years old – is reaching the average age of a first-time mother, 26. The number of births is increasing…”
Millennials having children is a big reversal; not only were they putting off having kids, but, in many cases, they weren’t having kids at all. According to Business Insider, “Birth rates for 20-something American women dropped more than 15% from 2007-2012… Millennials in their 20’s gave birth to fewer than one child per woman, which means their families could wind up smaller than Gen X'ers.” The recent recession is credited with this low birth rate, a typical trend we have seen with past economic turmoil.
The Washington Post reported, “The Great Depression, for example, led to a great baby bust. The cohort of women who were born in 1909—and therefore turned 21 in 1930—had the highest share of childless women of any group we’ve been able to track through the end of their reproductive years… About 22 percent of this cohort never had a baby, nearly twice the rate of the generation that reached its 20s during the height of postwar prosperity (a.k.a. the baby boom).”
What does this new baby-boom mean? Expenses, lots of them! According to the United States Department of Agriculture’s data, it will cost approximately $245,340 to raise a child born in 2013 “for food, housing, childcare and education, and other child-rearing expenses up to age 18.” By the way, costs for higher education are not included.
I believe that the cost estimate for raising children is way, way too low. Just take childcare, for instance. It can vary a lot, state by state. Child Care Aware compared average childcare costs to a state’s median family income. Oregon came out as the least affordable state, with the average care for an infant representing more than 18% of the median income for a married couple. By the way, New York, Minnesota, Massachusetts and Colorado also came out as being least affordable. Anna Bahney, a Forbes contributor noted in her article that, “For many families, it is true: child care costs more than public college in 31 states and Washington D.C. For 63 percent of American families with kids, either both parents or a single parent is working. The need for child care is immense and growing. And, the expense can leave families struggling.”
Baby Boomer grandparents, now may be the time to help out. You could talk to your children about moving close by to help out with the childcare, or even reducing your living expenses by moving in with your children. We all used to live in extended families; we are all descended from tribal cultures. It is only in modern times that we decided that the “American Dream” meant to isolate ourselves. The practice of extended family members living together under one roof dates back to prehistoric times and is still prevalent today. The Aboriginal culture still does this, “Child rearing… is literally a family and community concern and is not confined solely to the parents of the child.” Many experts believe that there are great benefits for the children. “…extended family members can also provide the emotional and physical support (kids) need.” The emotional side of this goes beyond my wheelhouse, but as a grandparent, it’s nice to think that our added value is beyond what we can do economically.
Millennials need to brush up on more than diaper-changing skills.
They better start thinking about how to save and invest for their child’s college education. According to the US Department of Education, the average cost now for a year at a public college is $15,100 and a year at a private college is $32,900. They are assuming an increase of 6.5% each year over the last decade. Obviously, these costs are more than outpacing inflation and any wage growth that your Millennials hope to have. If you are a parent of a young child, by 2030, U.S. News & World Report is predicting that the average cost of public tuition will be over $44,000 per year, bringing that four-year total to around $200,000. That is the estimate for a public school, but what about a private university? You could be looking at over $525,000 for that 4-year degree, according to Dreyfus. (I have a stomachache.)
Grandma and Grandpa, as soon as you see the first sonogram; it’s time to have this conversation. Your Millennials need to start thinking about how much they need to save. They also must consider their risk-tolerance, balancing risk that against how much realistically their investments need to earn to keep pace with these rising college costs. And, let’s not forget the savings they need to consider for their own retirement. Their kids can borrow for college, they can’t borrow for retirement (don’t get me started on Reverse Mortgages!).
A great way to start is with a 529 College Savings Plan. Suggest that friends and family contribute to that instead of buying dozens of scratchy outfits that will be drooled on and handed down to the next unsuspecting child. It doesn’t matter how little they save, every penny will allow their child not to borrow that amount in the future; and, remember, they have the “miracle of compounding” on their side.
So, pop the bubbly and celebrate (making sure not to give your expectant Mom any liquor). There is nothing more important than helping to provide a happy and healthy life for your grandchildren. Our progeny will account for about one third of our planets population and all of our future. Enjoy the amazing gift of grandparenthood.
