How Low Birth Rates Could Affect Your Wallet
ICYMI, birth rates have been on a steep decline for the past several years. Many thought staying at home during the lockdowns of 2020 (😏and getting a lot closer) would reverse the trend but instead of a pandemic baby boom we have a baby bust. Is this a big deal?
Kinda, yeah. The numbers show that the US birth rate fell 4% last year. (That's the sixth straight yearly drop and the lowest rate since 1979.) As it turns out, fewer babies being born could cause economic growing pains that hit us right square in the Paycheck!
Here’s Five Fast Facts about how low birth rates could affect Paychecks & what you can do about it:
👶💸Less babies = less workers = less taxes - Fewer bambinos means that (eventually) there’ll be fewer workers to pay the taxes that fund all those public programs (can you say “Medicare & Social Security?) Of course, these programs are already having financial problems and that means your tax rate could go up or Social Security benefits could change.
🤑📈You might need to invest more for retirement - Having fewer people paying into public programs also means smart Paychecks should adjust and start investing as much as possible in order to maintain a cozy retirement. The best way to determine your savings target is to use an online calculator like this one and get after it.
😒📉Maybe more recessions are on the horizon - As a rule of thumb, more workers generally = a bigger economy. So, declining birth rates could be an indication of future economic trouble in the form of recession. It makes sense: economies don’t always just grow. However, there’s a few simple ways to recession-proof your money: feed your emergency savings account, pay off debt, and try hard to live within your means.
😬🍼You could pay more for certain products - Companies that make baby supplies, car seats, and toys have already felt the blow of less babies using their products. Many popular baby supply companies have started raising prices and changing their product lines to justify higher prices. For example, the average cost of diapers are expected to cost more than $80/month per child! So, gone are the days of cheap baby wipes and diapers...
🤰💼Good news? Fewer births could force some much needed changes - When surveyed, would-be parents say finances and time away from work are the main reasons for not having more children. New incentives could help change people's decisions. Lots of people think dishing out extra maternity leave, cash stipends, or giving parents extra child tax credits will boost baby-making but not everyone is convinced they help all that much.
🔥Bottom line: America's birth rate can impact where the economy is heading because our children are the future customers, investors, and labor force. As the population shifts in size smart Paychecks will have to respond accordingly by thinking about savings, finances, and planning for the future.
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