This Calculator Shows You How Much Money You Will Really Lose by Staying at Home With Your Kids.
When you sit down to calculate the cost of childcare, there is often a moment when one of the parents (usually the mother) looks at the numbers with disbelief and rage and asks the question, why should I work at all?
According to the Center for American Progress (CAP) , the average annual cost of keeping two children in a childcare center is about $ 18,000. Where I live in Los Angeles, that number can easily double. And spending continues to climb at an insane rate: Since 2009, childcare costs have risen nearly twice as fast as inflation, according to the Labor Department. Weighing costs against wages, some families find that if a parent leaves the workforce to stay at home with their children, it makes clear financial sense.
But in some cases this may not be the case.
There are many factors that influence a decision to work or stay at home with children (or choose a combination of both), and these factors are highly personal and often difficult to quantify. For example, parents may decide to stay at home because they are unhappy with the childcare options they have seen, or to ease the household burden on their working spouse, or because they want to . But when it comes to the monetary factor, CAP believes it is important that families not only look at the immediate costs of interrupting careers to become housewives, but also at the opportunity costs of a lifetime. The organization’s website has a detailed explanation of what this all means:
In addition to losing wages, parents who interrupt their careers earn less when they return to work, and these consequences also cut their retirement savings and social security benefits.
CAP research shows that workers can expect to lose three or four times their annual wages for each year outside the workforce. These losses add up to the fact that most parents have children when they are relatively young, so even a small reduction in annual income can lead to a very significant reduction in earnings over a lifetime for 30 or more years of work.
CAP has developed an interactive childcare cost calculator so you can get a more accurate understanding of the long-term financial loss that can be caused by leaving the workforce – even temporary.
Here’s an example of what it might cost a woman earning $ 44,000 a year to leave her job for five years at age 26. As you can see, this isn’t just a multiplication of $ 44,000 by five – the calculator also takes into account hidden costs such as lifetime wage increases and retirement benefits.
The calculator does not include taxes and does not add to childcare costs that you would have saved – you have to do it yourself. But it fills in some important gaps to help you make an informed decision. As the CAP emphasizes, “Childcare is expensive, but being fired from work to avoid such costs does not make childcare free.”