New Study Reveals the Hidden Costs of Being a Grandparent

If you’re planning to become a grandparent someday, it might be wise to start boosting your retirement savings — raising grandchildren can come with unexpected financial responsibilities.

A new report from The Senior List reveals that grandparents spend roughly $4,000 annually on their grandchildren.

The study also found that 1 in 5 grandparents feel compelled to give more than they can comfortably afford, and 10% have gone into debt or postponed retirement to offer financial help.

Out of the 1,200 participants surveyed, 10% reported having contributed $10,000 or more to their families.

These annual expenses typically include gifts, clothing, footwear, entertainment, dining out, vacations, college savings, extracurricular activities, and help with larger purchases.

Interestingly, 96% of grandparents said they provide some kind of financial support to their grandchildren, even if it strains their own finances.

Despite the pressure, many say it’s worth it. In fact, 63% say their grandchildren’s happiness justifies the cost, and 26% admit to living more modestly in order to provide support.

Many are even willing to delay or come out of retirement for their grandchildren’s sake — nearly half would postpone retirement, and 40% said they’d return to work if needed.

Additionally, 16% of grandparents have taken on parenting responsibilities and have at least one grandchild living in their home.

Still, the economic landscape has affected giving: 32% of grandparents have scaled back their contributions, while 7% have increased them to help with rising living expenses.

Patty David, VP of Consumer Insights at AARP, wasn’t surprised that grandparents are adjusting their support. “Back in 2018, our study showed average spending at about $2,600 annually,” she said. That figure has now grown to $4,000.

Even though most grandparents want to be generous, they must carefully assess how much they can realistically give without hurting their own financial well-being.

To support their grandchildren more sustainably, grandparents might explore options like investments, college savings accounts, estate planning, or using a 529 plan — which can help fund education costs without affecting the child’s financial aid eligibility, according to USA Today.

Ultimately, grandparents value the bond with their grandchildren more than material support.

“There are plenty of ways to make meaningful contributions without spending a lot,” David concluded. “Modern grandparents play many roles — as mentors, storytellers, caregivers, sources of wisdom, and keepers of family traditions.”