Got Extravagant Retirement Plans? Yeah, Kids Put a Big Damper On Them

Denielle Kennet plays with her daughter, Lennon Kennet, in their St. Petersburg, Fla., home.
Denielle Kennet plays with her daughter, Lennon Kennet, in their St. Petersburg, Fla., home. Heather Comparetto/The Penny Hoarder

Being a parent is a thankless job, and if you don’t plan perfectly, the decision to procreate might just ruin your retirement plans.

That’s according to Bloomberg’s analysis of a new study from Boston College’s Center for Retirement Research.

Immediately after having your first child, your expenses shoot up. You spend more money on food, clothing and baby essentials, and your larger home could mean higher rent or mortgage.

According to the U.S. Department of Agriculture, each child in a two-child, married-couple family costs $233,610 for the first 18 years of their lives. And that doesn’t account for the cost of college and any financial help parents provide their adult children.

Every dollar spent on your children is money not going into your retirement account to help you maintain your lifestyle when you leave the workforce.

Parents Retire With Less Wealth Than Their Childless Friends

According to the study, each child you have drops your income by 3.7%, relative to childless adults, and accumulated wealth dips another 4.5% for parents in their 30s.

By the time those parents are in their 50s, their income tends to match that of their childless counterparts, while their wealth grows only about 2.8% slower than the childless. But even as the gap begins to close, years of slower financial growth for parents has already impacted their retirement plans, Bloomberg reported.

To put the additional parental spending in more concrete terms, Bloomberg says 31% of parents give an average of $3,084 to their adult children each year while only 9% of parents ever see any money from their adult children. And those who do get money from their adult children only receive $595 on average.

Overall, there may be real emotional benefits to having children, but when you’re thinking financially, parenthood rarely shows any return on your investment.

Desiree Stennett is a staff writer at The Penny Hoarder. She plans to retire childless and alone but rich AF.

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