On paper, Kelly and her husband have it all figured out. The young couple lives happily in upstate New York, bought a home in 2020 before the housing market went bananas, and aim to contribute a few thousand dollars each month to their retirement plans and liquid savings account. Kelly works remotely at a job she loves, that pays her a big city salary despite her medium-cost-of-living location. But still, like many other millennials, the couple has put off having children, and isnt sure they ever will.
When I think of starting a family, I have hesitation to even wanting to do that, Kelly says. Blame all their student-loan debt. Starting to save for your kids student loans while still paying your own off, thats something I dont want to do.
Kelly, who is 29 and asked to go by only her first name for privacy reasons, is the breadwinner, earning $125,000 (with the possibility of a 10% annual bonus), but thats a new development. The most she ever brought home before her new job was around $62,000 per year. The thousands they are saving each month are also a new developmentlike many other six-figure households, Kelly and her husband havent built much of a financial cushion.
Im kind of playing catch-up, Kelly tells Fortune. I should have been saving for 10 years and I wasnt.
And then theres student loans hanging over their heads. Their combined $64,000 worth of school debt is a major source of stress. For the past few years, theyve been paying $400 each month rather than the typical $800, thanks to the federal Covid-19 payment and interest moratorium. Thats been instrumental to their catch-up savings contributions, but when the payment pause ends at the end of August, things will change.
Their finances feel tight enough as is that Kelly says she cant imagine adding in additional costs, especially not childcare to the tune of hundreds or even thousands each month. And given that Kelly earns 75% of the couples $166,000 joint income, she would not be able to leave the workforce, as women in heterosexual relationships still tend to do, to take care of their children. They find themselves in a sort of financial bind.
Even though I make six figures, I still feel like I cant get ahead, she says. Compared to past generations, $125,000 doesnt feel like enough anymore.
Student loan payments add to mounting financial pressure
Kelly is far from alone in feeling like shes stuck between a financial rock and a hard place. She and her husband are on their way to being HENRYshigh earners, not rich yetand the $166,000 they earn puts them well above the median U.S. household income, but things are tough for even these high earners as the cost of living grows higher and higher. Around 34% of households making at least $100,000 per year are living paycheck to paycheck, a recent survey found.
Were President Joe Bidens widespread student loan forgiveness plan to survive its time at the U.S. Supreme Court, the couples debt burden would be almost halved, Kelly says, making it a much more manageable sum that might allow the couple to consider expanding their family. But theyre not counting on the relief, given the conservative bent of the court.
Debt cancelation is anything but a sure thing, and Kelly is pragmatic when it comes to her financial position. Plenty of people in tougher financial spots have children and make it work, but Kelly can only focus on her own financial oxygen mask at the moment by building up her retirement savingsand still, she feels nowhere near where she should be, given her ageand putting away some money for the couples next home.
They currently live in an 800-square-foot, two-bedroom home. But with interest rates and prices as high as they are nowcomparable homes are $100,000 more expensive than they were when the couple bought their current homeKelly says even in a place with a lower cost-of-living, they just cant afford a new home big enough for a growing family.
There are trade-offs. She cant make the math work on funding her retirement, paying off her debt, saving for a home, and affording children.
Saving for retirement seems trivial when student loans loom over our heads. And starting a family seems impossible with the cost of childcare on the rise, she says. I recognize that Im extremely privileged, but I still feel mounting pressure when it comes to our finances.
