Blogs > Your Money

Dave Patterson and Erin Preston, a father-daughter team of Certified Financial Planner® licensees, provide thoughts and suggestions on a broad collection of personal finance topics.  Information provided in this BLOG is intended to be of a general nature and may not be appropriate for all situations.  Readers should consult with their own financial advisors before relying on any information contained herein.

Friday, November 5, 2010

A Budget Category Often Overlooked in Retirement Planning

My wife and I have one grandchild, a grandson now age four. We love him dearly and cherish the moments we have with him. We take care of him one day a week and it’s always a high point for us.

I distinctly remember talking to a couple we know, just prior to our grandson’s birth. The husband told me, that every time his wife passed a toy store, book store or children’s clothing outlet, his wife was drawn inside as if by a human magnet of some sort. He said his wife was constantly buying something for their grandchildren and I’d better prepare myself for the hit on our finances.

I never even gave it a second thought when I was contemplating my semi-retirement. Sure, I knew we’d be spoiling our grandchildren like everyone else, but I truly underestimated what our friend was talking about. Everyone wants their grandchildren to have the best of everything. It’s tough to pass up all the toys, books and clothes that many of us didn’t have when we were children.

If you’re in the planning stage for retirement, you might want to at least include a budget item for spending on your grandchildren. Consider doing so, if you will likely contribute to one or more of the following: their college fund, clothing needs, entertainment (movies, sporting events and special shows), toys, games and books. You also may buy car seats, game tables and sporting equipment. Perhaps you’ll help with swimming lessons, dance class and maybe even fees for little league. And, if you spend the winter in a warm climate, you may even want to set aside some money for plane tickets to help your kids come visit.

A recent article in the Wall Street Journal titled “Grand Times” by Glenn Ruffenach, (October 25, 2010) provides data from a recent study by, a website that focuses on family relationships. According to the article, grandparents spent an estimated $52 billion on goods and services for their grandchildren in 2009. In 2005, according to the article there were 62.4 million grandparents, and in 2010, an estimated 69.6 million. No data was provided for 2009, but we can estimate that there were , somewhere around 68 million grandparents that year. That means, that on the average, they spent around $765 each on their grandchildren, that year. For a married couple, that comes to $1,529 per couple, per year.

So, what would you spend if you had several grandchildren? One thing is for sure - you’ll likely spend more than you think. Of course, they’re worth every penny. Just don’t forget to include the category in your planning!


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