Deciding whether to stay at home or return to work after having a baby is more than just a financial decision – there are emotional and logistical implications. It involves weighing a complex set of benefits and drawbacks, including employer and U.S. family leave policies, which fall far short of other countries. Unfortunately, our free market economy leaves many families, particularly women, struggling to find a solution that combines work and home life.[i]
In Europe, for example, family leave policies include subsidized child care, generous parental leaves and taxation of individuals instead of families, which encourages women’s employment. Social acceptance of working motherhood has also made a difference in countries like France, and Britain where they provide a year of maternity leave, much of it paid, among other policies for the purpose of keeping women employed.[ii] Beyond the lack of workplace benefits, many in the U.S. feel there is a social stigma of being a working mother. Because there are greater limitations and expenses to child rearing, there is much to consider before making the decision to stay home and raise your children.
Childcare is one of the largest expenses of working full-time women. According to the National Association of Child Care Resource & Referral Agencies, the average cost of a U.S. daycare center can range from $11,666 per year to up to $18,770, depending upon geography and in-home daycare costs approximately $7,761 per year to $11,940 per year. For those who prefer to have greater comfort and control in who cares for their child by performing an extensive background check, that cost could be $500 to $700 per week, or up to $3,033 per month, for full-time care.
In addition, on top of the salary costs, you will need to tack onto that cost other benefits such as health insurance, paid vacation time, and of course employment tax. However without childcare support, the costs can exceed the after-tax benefit of working.
Factor into your calculations what are you giving up for your retirement annually. If you are no longer working, then it is likely you are no longer contributing to a company retirement plan. Your spouse may be contributing to a plan, but even with a company matching program, you may not be saving enough.
Depending upon your profession, determine if your employability quotient will decline by being out of the workforce. There is a fear for many that every day they are not working, their appeal to potential employers may decline. In this fast-paced technological world, work skills can quickly become dated.
Although not a comfortable topic to address, the reality is that when you no longer have your own paycheck, you become financially vulnerable. Ask yourself if you are prepared should the unthinkable happen. Unfortunately life doesn’t always go the way we plan. What if your spouse becomes ill, disabled, or dies. It is a good idea for you to discuss these issues with your partner in order to protect your family should the unthinkable occur. Or what if your spouse leaves you? If your partner is the sole breadwinner of your household, this could be financially devastating. If divorce is impending, you may not have access to assets until a settlement is reached. Alternatively you may be the one who severs the relationship, but it can take time to find a job.
You may find yourself unhappy if not having your own income means giving up certain luxuries, such as travel or dining out.
From an emotional and relational perspective, staying home has its advantages. Dual working households have added pressures in family lifestyle and less time available to spend as a family. Arranging work schedules to allow for timely daycare pickups and drop-offs can be difficult and adds complexity in the ability to have a work/life balance. All this additional stress of managing both a household and a career creates tension in the relationship, whereby staying at home could alleviate those tensions and prevent marital discord.
Leaving your job to stay at home is a big decision that you shouldn’t make lightly. Life has many unexpected turns. Your United Capital adviser can help you weigh the financial implications and help you put a plan in place that protects you and your loved ones.
[i] The New York Times, Why U.S. Women Are Leaving Jobs Behind by Claire Cain miller and Liz Alderman, 12/12/2014
[ii] The New York Times, Why U.S. Women Are Leaving Jobs Behind by Claire Cain miller and Liz Alderman, 12/12/2014
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