Counting the cost of child care
Returning to work after having a child is not an easy decision. There are so many things to take into account - both financial and emotional. You have to think about what's best for you and your family.
One issue is the rising cost of child care, according to a new AMP.NATSEM report 1. While it varies around the country - from regional Queensland to Sydney Harbour - the bottom line is, child care isn't cheap...and it's getting more expensive.
In recent years, child care has risen more than education, petrol and health. As well as covering the cost of child care, returning to work can mean losing Government benefits and paying income tax, which can have a big impact on your family income.
Closing the gap
So, as a family, you need to weigh up the immediate cost of one partner working against their long-term financial and career interests.
Despite recent shifts in gender roles, the partner going to work is still more often male, while the person staying at home is more often female.
This can mean a serious super shortfall at retirement for the partner missing out on years in the workforce. The average super balance for men aged 50 to 59 is almost double that of women - $93,833 compared with $54,720 for women 2.
Despite the short-term financial challenges, returning to work can have real long-term benefits. You get to maintain your skills, protect your future earning capacity and keep your super topped up while your child gets the benefits of early learning.
The AMP.NATSEM report says in spite of the high cost, most women will ultimately be financially better off by staying in the labour market and using quality child care.
Whatever you decide, it's important to make sure you're financially fit.
Of course, every family is different. And as a parent you should have the right to choose how you bring up your children. In some families, the mother may prefer to stay at home and look after the kids. And in other families, the father might be able to take on more responsibility at home.
But it's important you're aware of the impact of your choices on your economic situation - both right now and down the track when you're approaching retirement.
At AMP we can help you become more aware of your retirement savings by monitoring your super with our digital solutions, which allow you to easily access your finances, when and where you want to.
- Our iPad app lets you explore financial options from the couch.
- Our new My Portfolio web experience gives you total control from your computer screen.
And it's not just super. We can also help you learn more about the things you should consider so that you can make an informed decision.
- You can talk to an AMP financial planner about the financial implications of returning to the workplace.
- You can download the full AMP.NATSEM Child care affordability in Australia report to help understand the real costs involved.
- You can speak to your employer about getting AMP in to hold a seminar to help you and your female colleagues better understand your finances.
1. AMP.NATSEM Income and Wealth Report, Child care affordability in Australia, June 2014
2. AMP Retirement Adequacy Index, 2012
What you need to know
Any advice in this article is general in nature and is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of this advice having regard to those matters and consider the Product Disclosure Statement before making a decision about the product. AMP Life is part of the AMP Group and can be contacted on 131 627. If you decide to purchase or vary a financial product, AMP Life and/or other companies within the AMP Group will receive fees and other benefits, which will be a dollar amount or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.