Do you know how much it costs to be a grandparent? For some, it can be quite a lot. In fact, it may be an expense you’re overlooking when retirement planning. A recent study found that one in ten grandparents even delayed retirement or took on debt to help grandkids pay for various expenses, like housing payments, meals, travel and more.
The study, published by The Senior List, surveyed more than 1,200 older people about the support they supply to their grandchildren, including how much and what type of aid they provide and how these contributions could change/ have changed their standard of living. It found that 96% of grandparents have incurred costs from having grandchildren, spending an average of $3,948 annually to financially support them.
Unfortunately, the study also found that a large portion of grandparents have considered jeopardizing their own financial stability to support their grandchildren by delaying retirement, taking money out of their savings and more.
Here’s a closer look at how much it costs to be a grandparent in 2024.
The cost to be a grandparent in 2024
Here’s how much grandparents spend annually in various categories to support their grandchildren.
- Supporting large purchases (buying a car, helping with a home down payment, etc.): $1,000
- Tuition for school or college: $1,000
- Housing expenses: $1,000
- Vacations (including travel to visit them): $1,000
- Contribution to savings or college funds: $600
- Day-to-day expenses: $500
- Regular contributions or allowances: $500
- Gifts for special occasions: $400
- Clothing or shoes: $300
- Dining out: $300
- Tutoring/extracurriculars: $300
- Healthcare: $250
- Entertainment: $200
You’ll notice that a good chunk of money goes to categories like tuition, housing expenses and day-to-day essentials, which makes sense considering rising costs on everything from groceries to rent to college expenses. But you could hurt yourself financially while trying to help your grandkids tackle elevated costs.
Here’s a look at the sacrifices grandparents have made or considered making to financially support their grandkids.
- Live a more frugal lifestyle: 26% have, 50% have considered and 24% would not.
- Pull money from a savings or retirement account: 14% have, 57% have considered and 29% would not.
- Retire later: 10% have, 42% have considered and 48% would not.
- Take on debt: 10% have, 29% have considered and 61% would not.
It’s a balancing act between budgeting for yourself and assisting your grandchildren. Selflessness can be a virtue, but be sure you’re not threatening your financial stability — 57% of workers already feel behind in retirement savings.
However, you don’t have to choose one or the other; it’s possible to support your grandchildren while looking out for yourself. You’ll need to budget carefully and plan accordingly. You might also consider other ways to support your grandkids beyond just handing out cash.
Investment gift options may be a better route. For example, if you’re saving for a grandchild’s education expenses, consider opening a 529 savings plan. Thanks to the “grandparent loophole” grandparents can now use a 529 plan to fund a grandchild’s education without impacting their financial aid eligibility.
Not only can the funds in this plan be used to pay for tuition, but they can also cover room and board, fees and supplies. And if your grandchild doesn’t go to college or spends less than anticipated, you can now roll over unused funds tax-free into a Roth IRA.
