Grandparents are Spending $179 Billion a Year on Grandchildren
Updated on Jun 17 2019
A new survey from the AARP has found that grandparents are collectively spending $179 billion annually on their grandchildren, with each grandparent spending approximately $2,562 on grandchildren. Learn more about the financial role of grandparents in the lives of grandchildren and the importance of proactively balancing financial obligations to protect retirement and financial security.
The Financial Role of Grandparents
By the age of 65, 96 percent of Americans are grandparents, a number that has grown by 24 percent since 2001. The survey from AARP examined the role of today’s grandparents finding that they thoroughly enjoy dispensing wisdom and guidance, giving advice on everything from health to education. Acting as a moral compass, today’s grandparents provide crucial emotional and social support to their grandchildren.
In addition to moral and emotional support, almost all (94 percent) grandparents also provide some level of financial support. According to the survey, despite providing real financial support, 79 percent of grandparents do not actually consider themselves a financial supporter of grandchildren, the survey revealed that grandparents are spending money on grandchildren in a variety of ways:
- 86 percent of grandparents have purchased gifts for grandchildren, spending an average of $805 annually.
- 26 percent of grandparents paid for vacations for their grandchildren, spending an average of $1,746 annually.
- 21 percent of grandparents spend money on school tuition, averaging $4,075 per year.
- 14 percent spent money on day-to-day expenses of grandchildren, averaging $1,491 annually.
- 8 percent gave their grandchildren a regular allowance, averaging $1086 per year.
- 5 percent paid for major expenses including rent, mortgage, or medical costs averaging $4,033 annually.
- 5 percent paid for other costs, averaging $1,273 annually.
Financial Challenges Facing Grandparents
There’s no doubt that grandparents play an important financial and cultural role in the lives of younger generations. They are irreplaceable in the lives of grandchildren and their wisdom and knowledge is priceless. However, despite all the joys of grandparenting, it can cause a serious financial burden for some.
In fact, 13 percent of grandparents struggle with the financial expectations of being a grandparent and 8 percent say the financial cost of grandparenting is too much. For some grandparents, helping a grandchild manage financially means they must reduce their own savings and/or spending. 7 percent of grandparents have taken on debt to help their grandchildren and nearly 25 percent of those grandparents have cosigned a private student loan for their grandchildren and/or incurred credit card debt.
Those expenses only increase when grandparents have their grandchildren living with them. 7.7 million (11 percent) grandparents have grandchildren living with them. These full-time grandparent caregivers can face even larger financial burdens. Today’s grandparents need to be diligent about their financial and portfolio management for retirement longevity purposes, but immediate financial demands interrupt retirement savings for many grandparents.
If you are a grandparent struggling with the financial obligations grandparenting, consider connecting with a fiduciary financial advisor. As a trusted advisor, fiduciary financial advisors can help you develop a budget and retirement strategy that benefits you now and for years to come. They can also help you start difficult conversations with family members and set boundaries for spending in the future.
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