Kathryn Pomroy
The relationship between grandparents and their grandkids is special, making it difficult to describe this unique relationship.
A grandchild can bring unlimited joy and hope into our lives. At the same time, grandparents bring equal amounts of nurturing, wisdom, support and spoiling.
Do you know how much it costs to be a grandparent? For some, it can be quite a lot.
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It might be an expense you overlook when retirement planning. Sometimes grandparents delay retirement or take on debt to help grandkids pay for such expenses as housing payments, meals, travel, college and more.
If you're one of the many grandparents raising grandchildren in your home, costs can escalate even more.
Here’s a closer look at how much it costs to be a grandparent in 2025 and the sacrifices grandparents can make for their families.
The cost to be a grandparent in 2025
In a study published by The Senior List, more than 1,200 older people were surveyed about the support they supply to their grandchildren. Topics included how much and what type of aid they provide, and how these contributions could change/have changed their standard of living.
The study found that 96% of grandparents have incurred costs from having grandchildren, spending an average of $3,948 annually to support them.
Unfortunately, the study also found that a large portion of grandparents have considered jeopardizing their financial stability to support grandchildren by delaying retirement, taking money out of savings and more.
Here’s how much grandparents spend annually in various categories to support their grandchildren.
- Supporting large purchases (buying a car, helping with a home down payment, etc.): $1,000
- Tuition for school or college: $1,000
- Housing expenses: $1,000
- Vacations (including travel to visit them): $1,000
- Contribution to savings or college funds: $600
- Day-to-day expenses: $500
- Regular contributions or allowances: $500
- Gifts for special occasions: $400
- Clothing or shoes: $300
- Dining out: $300
- Tutoring/extracurriculars: $300
- Health care: $250
- Entertainment: $200
You’ll notice that a good chunk of money goes to such categories as tuition, housing expenses and day-to-day essentials, which makes sense when considering rising costs on everything from groceries to rent to college expenses.
Unfortunately, you could hurt yourself financially and undermine your retirement while trying to help your grandkids tackle elevated costs.
Among the sacrifices grandparents have made or considered making to financially support their grandkids:
- Live a more frugal lifestyle: 26% have, 50% have considered it, and 24% would not.
- Pull money from a savings or retirement account: 14% have, 57% have considered it, and 29% would not.
- Retire later: 10% have, 42% have considered it, and 48% would not.
- Take on debt: 10% have, 29% have considered it, and 61% would not.
Pros and cons of spending money on your grandkids
Supporting your grandchildren financially or otherwise during retirement can be a deeply rewarding choice, but it comes with trade-offs. Grandparents must balance such retirement fears as outliving savings, managing health care costs and foregoing dreams of financial freedom and travel.
Pros
- Stronger family ties: Gifts ($400/year) and outings ($300/year) deepen bonds, fulfilling your dream of family togetherness.
- Lasting legacy: Education contributions ($600/year for savings) secure grandkids’ futures, easing fears of not doing enough to support your family's needs.
- Grandkids’ opportunities: Covering clothes ($300/year) or health care ($500+/year) boosts their potential and aligns with your generosity.
- Tax benefits: Gifts up to $18,000/year (such as 529 plans) save on taxes, preserving savings for potential health care needs later.
- Personal joy: Spending on your grandkids (80% feel happy when giving) counters fears of lost purpose with family-focused meaning.
Cons
- Impact on savings: $4,000 per year per grandchild can take a toll on your annual budget, risking dreams of travel and long-overdue freedom from working.
- Dependency risk: Regular support ($500/year groceries) might create reliance, clashing with your goal of independence.
- Emotional stress: Pressure to give can undermine a relaxed retirement, heightening your financial fears.
- Less flexibility: Higher spending can limit retirement funds for surprises such as nursing home costs ($8,000-$12,000/month).
- Tax complications: Gifts above $18,000 trigger taxes, cutting into funds for living expenses or legacy plans.
It’s a balancing act between budgeting for yourself and assisting your grandchildren. Selflessness can be a virtue, but don't threaten your financial stability — 57% of workers already feel behind in retirement savings.
However, you don’t have to choose one or the other; it’s possible to support your grandchildren while looking out for yourself. Budget carefully and plan accordingly. You might also consider other ways to support your grandkids beyond handing out cash.
Investment gift options might be a better route. For example, if you’re saving for a grandchild’s education expenses, consider opening a 529 savings plan. Thanks to the “grandparent loophole” grandparents can now use a 529 plan to fund a grandchild’s education without impacting their financial aid eligibility.
Not only can the funds in this plan be used to pay for tuition, they can also cover room and board, fees and supplies. If your grandchild doesn’t go to college or spends less than anticipated, you can now roll over unused funds tax-free into a Roth IRA.
Weighing the costs
Most (if not all) grandparents would agree that they would do almost anything for their grandkids. Author Lois Wyse says it perfectly — "Grandchildren are the dots that connect the lines from generation to generation.”
While that's true, the costs of being a grandparent can overwhelm many grandparents, sometimes uprooting their retirement plans.
While you're all for spoiling the little ones, be sure to take care of yourself, so the time you spend together is worth every minute.
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