Grandparent Wallets Are Propping Up Young Families As Kid Costs Top $300,000

The new math of parenting and who is filling the gap

The cost of raising a kid has cracked $300,000 for the first time, and that figure does not include college. No wonder parents are turning to grandparents.

Among those expecting a hand, 47% think relatives will provide cash to cover daily essentials. About a quarter expect contributions to a 529 or another savings account. "Families trying to figure out how they're going to solve for these increased costs are really trying to lean on their extended families," said Robin Growley, who serves as BMO's US head of consumer products. When support shows up, it matters: parents who get family help said it cut about $1,915 a year from childcare and babysitting and $1,443 from grocery costs.

What support looks like at home

Gisele Ayora, 36, works in marketing and has three children, and the most meaningful assistance her in-laws gave involved housing and childcare. They purchased a $600,000 six-bedroom house in Manahawkin, New Jersey, and set the couple's monthly payment at about $1,700. That amount was about the same as their prior rent for a two-bedroom place, and roughly half the cost of carrying a mortgage.

Her mother-in-law also watched the kids when late nights or work travel popped up. After separating from her husband, Ayora moved in with her mom to lower housing bills. "This is how people make it," she said.

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For some families, that help can feel like getting a portion of an inheritance early, said Lindsey Stanberry, who founded the personal finance site The Purse. Baby Boomers hold plenty of wealth while their adult children face steep housing and childcare bills. For grandparents with fewer resources, though, that support can come at the expense of their own retirement plans.

The semi-retired therapist became a regular babysitter and even took bartending shifts to help. "Those burdens fundamentally changed my finances, my retirement plans," said Marlee, 59, who currently resides in Ocean County, New Jersey. She had relocated from New Jersey to St. Johns County, Florida, intending to work part time, prioritize her health and wellness, and spend plenty of time playing tennis regularly. Her daughter, who has a law degree, acknowledged she was initially embarrassed, yet after her marriage ended and a job search proved difficult, the setup became the best path to stay afloat.

The trade offs, the boundaries, and the bigger trend

Financial advisers warn against draining retirement savings to support adult children. Her 29-year-old son moved back in after a semester of college in 2017 and has lived rent free since. "The money that we've been planning on putting away for retirement to travel and do fun things during retirement - since we've spent all of our life working - I feel like we are not able to plan that or do that because it's like we're still raising him because he's still living there." Green is also a coach at Community Connections for Children in Pennsylvania, where she's seen about a 60% increase in grandparents caring for grandchildren over the past five years, and she says Pennsylvania offers subsidies to relatives, including grandparents, who provide childcare, but the assistance often wouldn't even pay for more than a week's worth of lunches and most grandparents provide care without pay.

For Marlee, the strain was emotional too, taking a toll she had not anticipated. She and her daughter formalized a plan: Melissa would contribute "sweat equity" by cooking and cleaning; once she found work she could live rent free for one more year, after which she would start helping with household expenses and rent. "You cannot jump into the riptide with your children," Marlee said. "You can only lend them a hand."

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