Do you know how much it costs to become a grandparent? For some people, that can be a significant amount. In fact, it may be an expense that is often overlooked when planning for retirement. A recent study found that 1 in 10 grandparents have delayed retirement or even taken out loans to help their grandchildren with a variety of expenses, including housing, food, and travel. did.
The study, published by The Senior List, surveyed more than 1,200 seniors to find out how much, what kind of help they provide to their grandchildren, and how much of this help they receive. We investigated whether and how their living standards could change. It found that 96% of grandparents incur costs from having grandchildren, spending an average of $3,948 a year to financially support their grandchildren.
Unfortunately, the survey also found that the majority of grandparents would consider risking their own financial security by delaying retirement or taking money out of their savings to support their grandchildren. did.
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Let’s take a closer look at what it will cost to become a grandparent in 2024.
How much it will cost to become a grandparent in 2024
Here’s how much grandparents spend each year in different categories to support their grandchildren.
Assistance with major purchases (purchasing a car, helping with a down payment on a home, etc.): $1,000 School or college tuition: $1,000 Housing costs: $1,000 Vacation (including travel to visit): $1,000 Savings or college funds Donations to: $600 per day – Everyday expenses: $500Recurring donations or allowances: $500Special occasion gifts: $400Clothing or shoes: $300Eating out: $300Tutoring/extracurriculars: $300Health care: $250Entertainment : $200
We find that a significant amount of money is spent on categories such as tuition, housing, and daily necessities, which is no surprise given the rising costs of everything from groceries to rent to college costs. is. But if you try to help your grandchildren with rising expenses, you could be hurting yourself financially.
Here’s a look at the sacrifices grandparents have made or considered making to financially support their grandchildren.
Live a more frugal lifestyle: 26% would consider it, 50% would consider it, and 24% would not consider it. Withdrawing money from savings or retirement accounts: 14% would consider it, 57% would consider it, and 29% would not consider it. Retire later: 10% would consider it. 42% are considering it and 48% are not considering it. Take out debt: 10% have considered it, 29% have considered it, and 61% have not considered it.
It’s a balancing act between budgeting for yourself and helping your grandchildren. Selflessness may be a virtue, but be careful not to jeopardize your financial stability. 57% of workers are already behind on their retirement savings.
However, you don’t have to choose one or the other. It is possible to support your grandchildren while looking after yourself. You need to budget carefully and plan accordingly. In addition to handing out cash, you can also consider other ways to support your grandchildren.
An investment gift option may be a better way to go. For example, if you’re saving for your grandchildren’s education, consider opening a 529 savings plan. Thanks to the “grandparent loophole,” grandparents can now use their 529 plans to fund their grandchildren’s education without affecting their financial aid eligibility.
Funds in this plan can be used not only to pay for tuition, but also for room, board, fees, and necessities. And if your grandchild doesn’t go to college or you end up spending less than expected, you can now roll over any unused funds into a Roth IRA tax-free.
