NEW YORK (CBSNewYork) – Child care can cost parents hundreds, even thousands, of dollars a month, forcing many to choose between working or staying home.
But parents could be losing more than their paychecks by leaving their jobs, CBS News’ Danielle Nottingham reports.
First-time mom Janet An is taking a break from her law career to raise 5-month-old Ellie and says the cost of daycare or a nanny will be a factor when she returns.
“If the cost of child care is going to eat up my entire salary, then it might make more sense for me to just continue to stay home with her,” she said.
But economist Michael Madowitz says that’s not always the best choice.
Faced with the same decision after having two kids, Madowitz built a wage calculator to measure the impact of staying home to care for his children. He found the losses add up to more than just salaries for moms and dads.
“There’s actually effects how fast your wages grow over time and has really significant effects on retirement savings,” he said.
The calculator takes factors, such as age, gender, current salary and how long you take off, and tallies how much you will potentially lose in wage growth, retirement benefits, stock options and salary over your lifetime.
For example, a 30-year-old woman earning $50,000 a year stands to lose more than $650,000 in benefits, raises and wages if she stays home from work for five years.
“If you’re really low income, it actually makes a big difference in terms of what kind of social security benefits you qualify for,” Madowitz said.
An tried the calculator to see the cost of taking a year off from work.
“It’s more than I had anticipated, especially the lost wage growth,” she said.
She said seeing the big picture will help her make the right decision for her family.
The calculator was designed as a resource for parents making child care decisions based on their finances. For more information, click here.