How will children affect your super?

Young family one child 150x150 How will children affect your super?

It’s a no-brainer: having kids costs money. You expect to take a short-term hit while they’re youngsters, but you probably don’t give a second thought to your retirement being affected.

These aren’t kidults – you know, the little darlings who grow into adults and can’t be prised out with a tyre-lever?

No, we’re talking about the choices you make now, while they’re still cute, having long-term results – mainly to superannuation savings.

If you have already started a family or are planning to go there, you already understand the costs associated with kids, particularly solving the dilemma of going back to work or staying at home. Driven mainly by concerns over the household budget, parents doing their sums are weighing the rising costs of childcare against government benefits and tax concessions.

Should one of you stay home? Should you both work?

Childcare can cost up to $170 a day, while a nanny can set you back up to $28 an hour.

Unfortunately, it’s going to cost you no matter which way you go, but while most people are thinking about their finances here and now, they’re not considering the long term impact on retirement savings.

As the costs of childcare increase, one parent staying home while the main income earner goes to work might see them better off in the short term, but what does that do to the stay-at-home parent’s super?

According to a Herald Sun report, an individual earning an average of $50,000 per annum, could expect to lose up to $34,000 in the first year. This figure increases to as much as $95,000 in three years when factoring in inflation, tax and lost investment earnings. Extrapolate that out to ten years and … well, you get the picture.

Considering our aging population, increased pressure on governments to provide infrastructure and better services for the elderly; there will be a much greater expectation that we’ll be funding our own retirements.

So what can you do? Is it possible to raise children and retire in style?

Before you race off to your nearest animal shelter and adopt a fur-kid instead of having the human version – which in itself is not the worst strategy – there are options.

The Australian Taxation Office (ATO) has a 5-step Super Check specifically for stay-at-home-parents. Well worth a visit, go to and follow the path Individuals>Super>InDetail>YourSituation.

Parents opting for the one-stays-at-home approach might consider spouse contributions. Under this scheme, the working spouse contributes to the low- or non-income earning spouse’s complying super fund. Tax concessions may apply.

Before starting a family, consider boosting your super with voluntary after-tax contributions. While at this stage, it’s also a good idea to ask your financial planner about alternatives that suit your current needs and future dreams.

So what’s it gonna be? Ballet lessons or a dog? Did someone say, walkies?


The advice on this site may not be suitable to you because it contains general information that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.  Please also refer to our general advice warning under contact us tab on our website.  The article is based on information available at the time of writing only and therefore care should be taken as to the accuracy of the content.

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