Is Delaying Life’s Major Milestones A Good Thing?

in Financial Planning by

There is an 11-year age gap between my mother and her only sister. When people ask them why, they always give the same response, “World War II”.

Understanding why someone would push out a major life milestone, like starting a family, begins with evaluating the environment that they live in, both historically and personally. My mother and her sister’s arrival into the world, for example, was shaped by shifting political, social and economic realities. Ideal timing for a life milestone in one era, will inevitably change in the next.

In the same vein, many of today’s Millennials are reaching milestones later than their parents’ generations – from leaving home to becoming parents themselves. Instead of blaming these trends on “irresponsible” young folks (who may really just be buried in student loans and coming out of a recession), it’s time to step back and evaluate what is leading Millennials to delay major life milestones, and if it’s necessarily such a bad thing. Some might even argue that in a world of longer lifespans, rising costs of living, and economic challenges, postponing traditional timelines for getting married, having children or buying a home can improve the fiscal health of all generations.

Delayed Adulthood

According to the US Census Bureau, nearly 20% of today’s 25- to 34- year olds live with their parents or grandparents, up from roughly 10% in 1980.

Forbes reported that current student loan borrowers have to pay back almost twice as much as borrowers 20 years ago. In 1989, Americans aged 18-34 had an average net worth of $3,300, whereas in 2013 the net worth of that same age cohort plummeted to -$7,700.

With heavy debt loads and a financial crisis greeting them at graduation, many of gen Y’s twenty-somethings felt pressured into accepting lower paying jobs than they would have in better market conditions – resulting in a 10-15% reduction in earnings for up to 10 years.

With those figures in mind, you probably wouldn’t blame a Millennial for holding off on buying a home, or returning to the nest during their first few years on the job. An extra stream of income for parents or grandparents could serve as a win-win too, also enabling a Millennial to use resources for aggressive debt pay off and investing.

Delayed Marriage and Parenthood

As a 29 year-old living with my partner and no immediate plans to get married or have kids, I am what some would consider a troubling postponement in family formation.

Personal reasons aside, finances are a major factor in my decision to hold off on reproducing. As costs rise for housing and health care, two income streams these days often meets only the basics of a middle-class living standard. I’m also investing in work now, and banking on returns later on from a long, fruitful career.

A study by the University of Maryland and UCLA analyzed over three decades worth of data on 2,200 women and found that women who delay motherhood end up being financially better off than those who don’t, with benefits lasting well into their 50’s. Another study, from the University of Virginia, found that for every year a woman delays motherhood, her career earnings will rise an average of 10%.

As more women have successful pregnancies later in life and reap the financial benefits of doing so, starting a family later in life may be a milestone delay worth celebrating.

Delayed Retirement

Baby boomers are leading the charge in shifting what is likely to be another postponed milestone – retirement. The trend is due to an unfortunate decline in traditional pension plans, leaving retirees to rely largely on their own, often insufficient, savings.

Meanwhile, life post-retirement is longer than ever and healthcare costs continue to climb, with the average couple projected to need around $240,000 for medical bills alone during retirement.

With gen X-ers and Millennials deferring financial resources to pay off debts in lieu of accruing retirement savings, and an uncertain future for social security, we’ll likely see the retirement milestone pushed back even further in years to come. Statistics show that those who work past the age of 65 tend to be happier and healthier than their fully retired peers, so I wouldn’t say that delaying retirement is such a bad thing. And, new retirement tools make it easier than ever to plan for what you’ll need in your golden years.

So… Are Delayed Life Milestones a Good Thing?

In today’s world, milestones that used to have traditional timelines are changing. Young people leave the nest later, and Americans are tying the knot and retiring later in life too. While a lot of folks are quick to say that delaying these events is worrisome, I beg to differ. My opinion? Don’t be afraid to enjoy the benefit of heading into parenthood or retirement later, with better financial footing. But more than anything, remember that there is no one-size-fits all timetable for when you should hit a milestone, whatever age you may be.

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Stefanie O'Connell

Stefanie O'Connell

Stefanie O’Connell is a financial expert, Gen Y advocate, speaker and author of the book, “The Broke and Beautiful Life.” She blogs about millennial finance at stefanieoconnell.com. @stefanieoconnel

5 comments

  1. Lu

    The only fly in the ointment in delaying parenthood for example, is that the female body is most healthy, generally speaking, between 22 and 28. Between 28 and the 30s, fertility wanes and complications begin in this area. Between 28 and 40, one is more likely to have children with birth defects, a set back in all other goals, and a heartbreak for the couple. Quality time with the small children, depending of the maturity of the couple, is better in the 20s. By 30s, the energy is waning, and staying up all night with sick children is harder then and in future decades. Many decide after it is all said and done, that having children works out better for these reasons earlier than later, for the children knowing and enjoying all their grandparents, and for said grandparents more likely feeling up to the possibilities of doing things with these grandchildren.
    I have several friends who wish they had started sooner.

    Reply
    • Anonymous

      Amen. We had kids early, Papaw and Gamma enjoyed them, and now we’re empty-nesters with health, time and (finally) funds to enjoy some great things…..

      Reply
    • Adrian

      That is simply anecdotal evidence. The people whose energy wanes after 28 are simply not working out. Save 65% of your income, no matter what you make, and you can be financially independent in 9 years. Then, if you have a kid, you’ll have plenty of time to balance a kid and personal health. Waiting until your 30’s to have children is a perfectly valid strategy, as the risks of complications hardly rise from around 1% to 2%. Yes, this is a “doubling of risk”, but the risk is small to begin with, especially if you keep in good health.

      Reply
  2. Bob B

    I had my first (and currently only) child at age 37 and have no regrets. I’m still young and fit and we’ll be paying off the house before he goes to college. Not only has my energy not “waned,” but I’d say I’m far more mature and calm than I was 10 years ago, and I think that’s helping us raise a very well adjusted and well behaved son. Very happy and if I had it to do over again, I’d still wait.

    Reply
  3. Bob B

    On another note, I wish they had better age groups for net worth than “18 to 34”. That’s an incredibly diverse range, with 18 yr old likely to be around zero net worth (nothing to balance), mid 20’s likely to be in the negatives (car loan, student loans, etc) and those nearing 34 likely to be in the positive side of the scale. I think the comparison data is enlightening but I think if you compared the % who have gone to college, you’d see why it’s skewed. Now, compare the life earnings of the same group and adjust for inflation and I’m betting we’d see it go way up.

    Reply

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