Last week, I wrote an article ("Do You Want to Work Forever?") that offered possible reasons for why people choose not to save for retirement, and I asked readers for their suggestions. I received several responses: Our consumer society doesn't value saving, people don't know how to delay gratification, and the government taxes us too much, to name a few.
But those were from people who actually are saving. What do the nonsavers have to say for themselves? I received some genuinely poignant stories about financially devastating health problems and job losses. (Is anyone safe from those?)
However, one reason was offered more than all the others: kids.
The Census Bureau says that the median family household income in the United States was $52,704 in 2002 (the most recent number available). According to the United States Department of Agriculture, the annual cost of raising a cow, I mean a child, in 2004 will be $9,800 for middle-income families. That's right, a kid consumes almost 20% of the paycheck. The USDA estimates that raising a chicken, er, a kid born in 2003 will cost $172,370 to $344,250 by the time he leaves the nest -- and that doesn't include college costs. No wonder parents have trouble saving for retirement.
Go forth and multiply... something
So I, as a father of three, must ask the question: Are they worth it?
Sure, the tax credits are nice, but they barely cover the cost of milk these days. And ever since the enactment of child labor laws, kids are guaranteed a free ride. Of course, if your progeny are like Berkshire Hathaway
OK, so you can't boil down procreation to dollars and cents. There is also the humiliation. I never thought I'd spend so much time helping other people go to the bathroom, and talking about it with my wife (not to mention going through my 3-year-old son's bodily byproducts to make sure the penny he swallowed made it out OK). Then there's the time he pointed to the lady in front of us in the checkout line and asked (for all to hear), "Why is she so fat?" Which is just as bad as the times he talks about his private parts in mixed company. (So far, we have been spared this ignominy with our 2-year-old daughter, who, because she still has trouble pronouncing V's and G's, refers to her private parts as her "china." However, we anticipate confusion when, in eight months or so, my wife and I adopt a girl from China.)
Oh, and I eat my children's scraps. It's true. Sometimes they eat everything on their plates; sometimes they don't. And wasted food drives me nuts. So when I make lunch, I don't make myself a complete meal because I can usually count on their leftovers. The same goes for ordering food at restaurants (I don't mind half-eaten "smiley face" pizza).
I can't figure out why they'll sometimes eat their bananas and why sometimes they won't. But I'll finish it for them. This is what I've been reduced to. (By the way, any food I don't finish goes in the "goulash shake" for the evening's dessert. All the leftovers -- yogurt, juice, blueberries, hot dogs -- end up in the blender, then into a cup with a straw. The kids love it.)
Retire or reproduce?
In my Motley Fool Rule Your Retirement newsletter, I profile "success stories" -- people who retired on their own terms. Of the folks who retired very young, they have many things in common: They were aggressive savers, they managed their expenses, they took control of their investments... and they didn't have kids. Socking away an extra $172,370 to $344,250 can do a lot for a nest egg.
On the flip side, some parents really have to make a choice between contributing to an IRA or feeding and clothing their little Ira. One reader sent me this email:
We have eight children. The youngest two are still in high school. I'm 56 and my wife is 54. I'll be 63 (almost 64) when my youngest gets out of college... and then I'll have a large Parent PLUS Loan bill to continue paying on. These were all our choices, but we'll never retire.
So again, I must ask: Are they worth it?
For me and my wife, the answer is a resounding, emphatic "Yes!" Despite the costs -- the lower savings, the sleepless nights, the drool-stained shirts -- I have never been happier than I am now. No one makes me laugh more than my kids do. Nothing will rival the experience of being affectionately mauled by my kids when I come home, or getting all choked up when my 13-year-old daughter sings a solo in the school play. Not even the Super Bowl can do that to me.
As I've suggested many times in my articles and newsletter, the key to maximizing your money is paying for your priorities and forgoing the frivolities. Whether you're struggling parents or super-flush DINKs (double income, no kids), your net worth will certainly be enhanced by (1) deciding what's most important to you, (2) examining where your money is going, (3) cutting out the expenses that provide just fleeting satisfaction, and (4) directing as much as possible toward the things/people/experiences that bring you the most genuine, lasting happiness.
Parents who want to retire have to be extra-vigilant (and brutally honest) about where their money goes. My wife and I had to make some tough choices this summer after she quit her salaried job to start her own business. It may mean we won't contribute as much to her Roth IRA this year.
But even if we have to retire a little later because we've spent so much on our kids -- and chosen jobs that allow us to spend more time with them -- I know we won't have any regrets. For us, there has been no greater investment than our embarrassing, exhausting, hilarious kids.
Robert Brokamp thinks you should thank him for creating future workers who will one day pay your Social Security. He is also the editor of the Motley Fool Rule Your Retirement newsletter service. Try it free for 30 days and receive the "8 Ways to Supercharge Your Retirement" special report.