Grandparenting brings many joys, such as passing down traditions and spending treasured time with grandchildren, but a new survey suggests it can come with financial strain as well.
For many Americans, becoming a grandparent is a costly affair. Grandparents in the U.S. spend an average of $2,562 a year on their grandkids, according to a survey of 2,654 grandparents conducted by AARP. Collectively that amounts to approximately $179 billion a year.
The survey found the average first-time grandparent to be 50 years old, with the youngest being approximately 38.
While some grandparents have the financial means to provide for their grandchildren, that’s not the case across the board. In fact, 13% of the grandparents surveyed said they struggle with the financial obligations that accompany grandparenthood, including traveling costs to visit the grandkids.
One area where grandparents have been particularly generous is in helping their grandchildren pay for education. Of those surveyed, 95% said it was important that their grandchildren get a higher education, and some were also putting their money behind that sentiment.
According to the survey, 21% of respondents spent money on their grandchildren’s school or college tuition. The average amount spent was $4,075 per year.
Unfortunately some of the grandparents who help with school costs this way have experienced their own financial setbacks as a result. Approximately 7% have taken on debt to help their grandkids pay for college—and of those, about a quarter have either cosigned private student loans for their grandchildren or have accumulated credit card debt for school costs that they have yet to pay back.
Some grandparents take on an even greater financial responsibility by serving as a primary caregiver for one or more grandchildren. The survey found that 11% of grandparents have grandchildren who live with them, and 22% said the financial cost of grandparenting “can be too much.” That’s not too surprising, considering that the median income of grandparent caregivers was $51,448 per year—and in households where the grandchild had no parent present, the median income for grandparent caregivers was just $37,580.
While some grandparents foot the bill for needs, others are spending money on fun and other extras:
86% of respondents said they bought gifts for their grandchildren over the past year, totaling, on average, $805 per year.
26% spent an average of $1,746 per year on vacations with grandkids.
8% spent an average $1,086 per year giving their grandchildren weekly, monthly or yearly allowances.
It’s clear from the survey that many grandparents are playing a major role in contributing to their grandchildren’s financial well-being. If you are a grandparent and can afford to share your wealth, that might be a rewarding way to spend your money.
However, it’s important that grandparents consider their ability to provide for their own futures before helping others. Dipping into retirement savings and amassing debt are never good ideas since seniors could find themselves outliving their retirement savings.