Should You Take a Few Years Off to Have Kids? This Is the Real Financial Cost

Updated 08/14/17
The Chriselle Factor

The decision to become a stay-at-home parent involves a myriad of factors beyond finances, but for many, the daunting cost of childcare can tip the scale. After all, daycare can cost more than college tuition in many states, so it might seem financially smarter to pause your career for a few years and avoid that expense.

But as Michael Madowitz, an economist at the Center for American Progress, points out, lost earnings aren't the only financial cost of becoming a stay-at-home parent. He points out that in addition to wages, parents also lose out on future earnings, like the chance to receive raises during that time and put away retirement savings. Because it's cumulative, these costs can actually amount to a lot of money.

To take the guesswork out of the conversation, Madowitz has created a calculator to crunch the numbers. For example, Working Mother used the calculator to find out how much it would cost a 26-year-old mom making $44,148 (the median pay in the U.S.) to leave the workforce to raise her children. In addition to her salary, "she will also lose $64,393 in wage growth (the cumulative effect of time off on future earnings), as well as $52,945 in retirement assets and benefits," it reports.

Granted, the decision to become a stay-at-home parent extends far beyond money, but if you're curious to know how the decision could impact your financial future, go ahead and test-run the calculator.

Does the cost of childcare factor into your decision to become a working or stay-at-home parent?

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