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A recent analysis by Telegraph Money reveals that women who have children in their forties are likely to retire with smaller pension pots compared to those who become mothers at a younger age.

Consider two scenarios: A woman earning £30,000 takes a two-year break at age 30 to have a child, returns to part-time work at 32, and resumes full-time work at 40. She will retire with £11,000 more than a woman who earns £36,000 and has a child at 40.

The primary factor behind this disparity is time. Younger mothers have more years to accumulate disposable income, which can be invested into their pension funds once their children are grown and have left home.

For instance, if a younger mother increases her pension contributions from 10% to 15% starting at age 40 and continues until she retires at 68, she will have a pension pot of £273,818.

In contrast, an older mother who makes the same adjustment at age 50 will retire with £262,762, even though she saved more before having a child.

Becky O’Connor, director of public affairs at PensionBee, explains that while younger mothers have the advantage of time to grow their pensions, older mothers should not be discouraged.

“It’s never too late,” she says. “Even at age 50, you can still get your pension pot higher than it would have been if you’d never taken a career break.”

Becky O’Connor, PensionBee

The analysis also challenges the notion that delaying motherhood leads to better financial outcomes.

Conservative MP Miriam Cates argues that this data should give women and their partners confidence that “starting a family does not mean that they have to sacrifice financial security later in life.”

The trend toward later motherhood has been rising due to advancements in fertility treatments and societal shifts like couples marrying later.

However, Mandy Garner of campaign group Working Mums points out that many women are not adequately informed about the long-term impact of these life choices on their retirement savings.

The gender pension gap is already a significant issue. Women nearing retirement age have just 65% of the median pension wealth that men have, according to data from the Department of Work and Pensions and the Office of National Statistics.

Emma Lou Montgomery, associate director for personal investing at Fidelity, notes that women’s pensions suffer due to the “Good Mother Good Daughter” penalty, where women often bear the brunt of childcare and eldercare responsibilities.

While the decision to have children at any age is a deeply personal one influenced by various factors, women must be aware of the long-term financial implications.

Planning and making informed choices can help mitigate the impact on retirement savings, regardless of when one becomes a mother. If you’d like to understand more about how this could effect you, or want to be better informed about planning a secure financial future for yourself then get in touch with us.

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