Millennials Are Not Having Kids: 3 Ways That Could Impact Your Wallet

LumiNola / Getty Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

The United States is facing a serious crisis when it comes to its population, one largely fueled by the fact that millennials — those born between 1981 and 1996 — are increasingly choosing to go child-free.

There are seemingly many reasons for this trend, one being the cost of raising a child in today’s America. According to an inflation-adjusted estimate based on USDA data, Credit Karma suggested that parents to a child born in November 2023 might expect to spend roughly $307,000 from birth to age 18.

This is not the only reason, however, with CNBC Make It suggesting that many millennials may simply choose a lifestyle path that doesn’t coincide with parenting. An overall skepticism over a “traditional [life] trajectory,” as CNBC quoted one interviewee as saying, rather than to see success in life “work 1,000 different ways” could be emblematic of a generational shift in thinking on the subject.

According to Pew Research, the most common reason given by adults under 50 as to why they do not have children is that they “just don’t want to.”

Regardless of the reasons for a declining interest among millennials when it comes to having children, the U.S. birth rate remains very low. According to the National Center for Health Statistics, the fertility rate clocked in at 1.6 births per woman in 2023 — far below the required 2.1 figure required to sustain the population.

What sort of impacts might a declining American population have on your pocketbook?

Retirement and Social Security Benefits Might Be in Peril

Evoking the term “demographic winter” in reference to a declining population due to falling fertility rates, Forbes contributor Joseph Coughlin gestured toward the realities of an aging population when it comes to retirement.

“Fewer children mean fewer family caregivers for older loved ones but also smaller labor pools, increasing pressure on social safety nets and healthcare systems. The shrinking younger population translates to fewer contributors to pension systems and higher dependency ratios, which can strain public resources and lead to increased taxes or reduced benefits,” Coughlin wrote.

The Peter G. Peterson Foundation (PGPF) also weighed in on the population decline, particularly the impacts it could have on U.S. seniors. A few key pieces of data presented in its May 2024 report include:

• By 2030, for the first time in U.S. history, those aged 65 and older will outnumber those below the age of 18.
• In 2020, the aged 65-plus cohort represented 17% of the population, but by 2035 that figure will rise to 22%.
• In 1964, there were four workers for every Social Security recipient. That ratio will fall to 2.3 workers for every beneficiary by 2044.

Given that the solvency of Social Security is already in question, as the House Budget Committee made plain earlier this year, an increased strain on the fund based on a growing population of seniors with a higher life expectancy is an ominous prospect. Add to that scenario a dwindling population base of working-age citizens to help bolster the fund via tax dollars, and increasing costs facing beneficiaries as a whole, and the situation becomes even more serious.

Caregiving Could Become More Costly, and Medicare May Falter

Discussing a related matter, Coughlin outlined another factor that may come into play during one’s retirement years, or even before. Should poor health set in, a lack of children could also mean a lack of familial caregivers, particularly if an individual’s economic circumstances mean they cannot afford professional care.

“Without the traditional reliance on children for support in old age, investing in long-term care insurance, saving diligently for retirement and considering alternative living arrangements become essential strategies for ensuring security in later years,” Coughlin wrote.

There is a direct correlation between aging and healthcare costs, which comes as little surprise. Citing data from the Centers for Medicare & Medicaid Services, the PGPF indicated that the per capita healthcare costs for those aged 85 and up were about 75% higher ($35,995 annually) than those in the next highest age group (ages 65-84, at $20,503 annually).

Allowing that a great deal of those costs could be taken on by a healthy Medicare system — and that the Medicare Trustees “project that Medicare’s Hospital Insurance Trust Fund will be depleted by 2036, resulting in an 11% shortfall in payments for medical services” — it could mean individuals shouldering even more of the financial burden for continuing and critical care in the future.

Fewer Working-Aged Persons Means a Hit to GDP (But It’s Complicated)

With fewer Americans of working age available to participate in the economy, it seems a sure bet that the nation’s GDP suffers as a result of a lighter labor pool.

According to Todd Buchholz, a former White House economist, the declining birthrate in the U.S. could end up pulling down the GDP by one or two points, as Business Insider reported. Though it not might sound like much, such a result would cut America’s rate of growth by a third.

James Pomeroy, HSBC’s global economist, offered up an even more threatening scenario, suggesting that in a worst-case scenario, GDP could plummet by three to four percentage points.

“You find it more difficult to find somebody to cut your hair, do your nails … set up the x-ray machines at the hospital,” Pomeroy said. “So the sheer decrease in the number of people … becomes a problem.”

A falling GDP typically brings with it the threat of recession — fewer jobs, property foreclosures and more, according to U.S. News — but in this instance, economic consequences could be unique and prolonged due to established demographic trends regarding an aging populace. Due to massive waves of baby boomers exiting the workforce en masse, the typical unemployment rate coinciding with a lengthy recession may not result.

However, a “forever labor shortage” could pose opportunities for more work, but that work could be supplanted by more cost-effective innovations — or by foreign labor — according to a separate Forbes report.

Share This Article: