The Cost of Being a Grandparent
Being a grandparent is one of life’s greatest joys. From birthday surprises to weekend adventures, those shared moments with your grandkids create memories that last a lifetime. But along with the laughter and love often comes a less-discussed reality — the financial cost of being a grandparent.
A recent Kiplinger article, How Much Does It Cost to Be a Grandparent?, offered some eye-opening insights based on a study by The Senior List. Surveying more than 1,200 older adults, they found that 96% of grandparents take on some financial costs for their grandchildren, spending nearly $4,000 a year on average.
Where the Money Goes
The expenses vary widely, but they add up quickly:
Big-ticket support: $1,000 toward a down payment, buying a car, or other large purchases.
Education: $1,000 for tuition, school supplies, or college costs.
Housing: $1,000 for rent, mortgage, or utility help.
Travel: $1,000 for vacations or trips to visit grandkids.
Other recurring expenses include:
$600 for savings or college funds
$500 on everyday expenses
$500 in allowances
$400 on gifts
$300 on clothes and shoes
$300 dining out
$300 for extracurricular activities
$250 for healthcare
$200 for entertainment
With inflation driving up the cost of everything from groceries to gas, these contributions can quietly strain a retirement budget.
The Sacrifices Grandparents Make
The study revealed that many grandparents are making significant sacrifices to help their grandkids — and often in ways that can have a lasting financial impact. Some have already started living more frugally to make ends meet, while others are tapping into retirement savings or delaying retirement altogether. In fact, about one in four grandparents have tightened their budgets, and 14% have withdrawn from retirement accounts to provide support. Many more have at least considered these steps, with over half saying they’ve thought about using savings and more than 40% contemplating working longer. In some cases, grandparents are even taking on debt to help out. While these choices are made out of love, they can also strain financial stability if not carefully planned.
The Benefits of Giving
Supporting grandchildren financially can bring tremendous personal satisfaction. Whether it’s paying for a special outing, contributing to a college fund, or covering essentials like clothing or healthcare, these gestures often strengthen family bonds and create lasting memories. Beyond the emotional rewards, there can also be practical advantages — such as knowing you’ve helped shape your grandchild’s future or potentially receiving tax benefits for certain types of gifts. Many grandparents take pride in leaving a legacy, and financial support is one way to pass along both resources and values.
The Risks of Overspending
While generosity can be deeply rewarding, it’s important to recognize the potential downsides. Spending thousands each year on grandchildren may reduce your retirement savings, limit your flexibility for future expenses, or make it harder to handle unexpected costs like medical bills or long-term care. There’s also the possibility of creating unintentional financial dependence if your children or grandchildren come to expect ongoing help. And without careful planning, larger gifts could trigger tax implications. The key is to balance the joy of giving with the need to protect your own financial security.
Finding the Right Balance
You don’t have to choose between your financial security and supporting your grandkids. Thoughtful planning can help you do both. One powerful tool is the 529 savings plan, which not only supports education but also avoids hurting your grandchild’s financial aid eligibility. Funds can be used for tuition, room and board, supplies, and more — and leftover funds can now be rolled into a Roth IRA tax-free.
At Olive Branch Wealth Management, we help grandparents design financial strategies that balance generosity with long-term security. Before making big financial commitments for your family, it’s worth taking the time to ensure your own future is well-protected.
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Disclosures:
All content discussed in this article is for informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. Opinions expressed are solely those of Olive Branch Wealth Management, LLC and its staff. The information presented is believed to be from reliable sources; however, Olive Branch Wealth Management, LLC makes no representations as to its accuracy or completeness. This article shall not be construed as an offer to sell or a solicitation to purchase any insurance product in any jurisdiction in which the agent is not licensed. Topics should be discussed with a licensed insurance agent, tax professional, or financial adviser before implementation. Olive Branch Wealth Management, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency.
Sources:
How Much Does It Cost to Be a Grandparent? – Kiplinger
