A new addition to the family would send most young adults scrambling to find a financial advisor. Here’s why.
The birth of a new baby would prompt more than two-thirds of young adults to reach out to a financial advisor – ostensibly to deal with the staggering costs of child rearing, according to the latest monthly survey from Spectrem’s Millionaire Corner.
It’s expected to take about $234,900 in current dollars to raise a child born to middle-income parents in 2011, according to the latest data available from the U.S. Department of Agriculture, which has tracked child-rearing costs since 1960. A family earning less than $59,410 a year is forecast to spend roughly $169,080 in 2011 dollars raising a child from birth through high school. A family earning more than $201,870 is expected to spend $389,670 on food, transportation, child care, housing clothing, education and other goods and services.
The figures don’t include the costs associated with pregnancy or education beyond high school. Add another $71,440 to the bill for the average in-state student currently attending a public college, according to estimates from The College Board. Average tuition, fees, room and board are even higher for out-of-state students at public colleges and those attending private schools, and costs at all institutions are going up each year.
No wonder parenthood is the event most likely to cause adults ages 40 and younger to contact a financial advisor. Roughly 68 percent said they would reach out to a financial professional in the event of the birth of a child, according to our research, while 55 percent of young adults indicate they would also contact a financial advisor in the case of marriage, divorce or for retirement planning. (Older investors are most likely to contact an advisor in regard to a financial windfall, changing tax and estate laws, or to cope with market volatility.)
Retirement planning ranks high among the financial concerns of young investors.
An advisor can help young adults devise a written financial plan that includes savings goals and investment strategies to meet the financial challenges of parenthood. Advisors can also discuss estate planning strategies to provide for dependent children, and can help assess a young family’s insurance needs and changing tax status.
Debt is also a serious personal financial concern for many young investors.
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