(Part 1 of a two-part series)
What does it cost to be a grandparent?
These days, for millions of Americans, the answer is quite a lot.
Demographer Peter Francese, who last year collaborated with MetLife Mature Market Institute on a report about the current generation of grandparents, estimates that today’s grandfathers and grandmothers spend, on average, $900 to $1,200 a year on clothes, baby food, furniture and education expenses for their grandkids.
Do the math and you’re talking about $16,200 to $21,600 over a grandchild’s first 18 years.
Among well-to-do grandparents and the 2.7 million grandparents who are the primary caregivers for their grandkids, the price tag is higher — maybe as high as 10 times as much, Francese says.
Holiday and birthday gifts are the most common forms of the grandparents’ largesse, but more than half of America’s grandparents also help out with educational expenses and 37 percent pitch in on their grandkids’ everyday living expenses, according to a recent AARP survey of grandparents 50 and older.
Collectively, grandparents are providing quite a boost to the U.S. economy.
They spent $7.6 billion on products including baby food, clothing and toys for their grandchildren in 2009 (the most recent figures available), an increase of 71 percent from a decade ago, according to MetLife. And grandparents shell out more than $2.4 billion a year on primary- and secondary-school tuition and supplies.
And this doesn’t even count the impossible-to-quantify value of providing child care for grandkids. In recent years, grandparents have increasingly become the go-to babysitter for preschoolers.
Undoubtedly, many 21st-century grandparents love spoiling their grandchildren, often to an unprecedented degree.
Just ask Marge LaRocca, of Brick, N.J., who dotes on her 7-year-old granddaughter, Alexis Margaret, and 4-year-old grandson, John Douglas. If LaRocca sees a cute outfit for Alexis or an action figure for John when she’s shopping, she buys it impulsively. She and her husband, Douglas, also mark big events, like a christening or first communion, by contributing to their grandkids' 529 college savings plan. So far, they’ve put in about $2,500.
“That’s what grandparents do,” says LaRocca, 61, a seventh-grade math teacher.
True enough. In the AARP survey, 36 percent of grandparents said spoiling their grandchildren “by buying them too much” was part of their financial role.
One reason many grandparents are so generous is that they can be. America’s 65 million grandmothers and grandfathers are relatively affluent, especially the 32 million who are baby boomers, Francese says. Since today's grandparents are better off financially than those of past generations, they can generally afford to spend more on their grandkids.
Patricia Holsendolph, 63, estimates that she spends up to $1,200 a year on birthday and holiday gifts for her three grandchildren. “I see nothing wrong with spoiling them,” she says with a laugh. “I enjoy that.”
Holsendolph and her husband, both retired in Oxon Hill, Md., also pick up the cell phone bills for their two teenage granddaughters, who live in Florida.
In addition, Holsendolph occasionally babysits her 11-year-old grandson, Caleb, about an hour away in Ellicott City, Md., when his mother needs to work late or run errands. “I have the time, and Mom doesn’t always have the time,” she says.
As the second part of this Next Avenue series notes, many financial experts worry that the current crop of grandparents is too generous — and might be endangering their own retirement as a result.
Amy Goyer, a family expert at AARP, is especially concerned about the grandparents who are the primary caregivers for their children’s kids. As she points out, “It’s hard to say, ‘I have to put money aside for myself' when grandkids don’t have clothes that fit them.”