How Low Birth Rates Could Affect Your Wallet

Published on: Feb 3, 2021fb-roundtwitter-roundemail-round

At the start of the pandemic, many thought people staying at home more often (and getting a lot closer than six feet apart) would lead to a huge baby boom. Now experts say it’s looking more like a baby bust.

What you need to know: Preliminary reports show steep declines in birth rates across the US over the past year. And a Brookings Institute report estimated there could be another 300,000 fewer births this year compared to 2020.

Your move: Fewer babies means you might get to spend less on shower gifts. But low birth rates can affect your wallet in other ways, too. Here's what you need to know:

  • You might need to invest more for retirement. A declining birth rate means eventually there’ll be fewer workers to pay the taxes that fund public programs like Medicare and Social Security (which is already having financial problems). That means your tax rate could go up. Or Social Security benefits could change. Investing as much as you can for your future can help you maintain the life you want in retirement – no matter how much money the gov can afford to give you.

  • You could pay more for baby products. Companies that make baby supplies, car seats, and toys are already feeling the blow. To help curb losses, some – like Pampers and Huggies – have started developing alternative products (think: plant-based diapers and ones that fit like pants) to justify higher prices. If you're adding a tiny plus-one to your fam, make sure to factor these potential higher costs into your new-parent budget.

  • We may see more recessions. More workers generally = a bigger economy. And vice versa. Meaning that steadily declining birth rates could be an indication of future economic trouble. A few ways to recession-proof your money: feed your emergency savings account, pay off debt, and live within your means.


Babies are expensive. Turns out, Americans not having babies could cost you money, too. Working on your savings — the kind you can use in the short term and to live off of in retirement — is a good defense. No matter what happens next.

Want more Skimm Money?

Say ‘hi’ to our weekly newsletter. Every Friday, we break down the news and info you need to make smarter money decisions.

I'm in

Skimm'd by: Ivana Pino, Stacy Rapacon, and Elyse Steinhaus