Cost of Raising a Child

By Pam Henderson

A recent online news headline grabbed my attention: “How long $1 million will last in retirement in every state.” You may be thinking what I’m thinking – that I wish I had one million dollars so I could see just how long it really would last.

Play along and imagine for a moment that you are retired and have indeed stockpiled that much money. For how long could you live off of it? According to this article that appeared on MSN, if you retired in Indiana with $1 million, it would last for 24 years and 9 months. At No. 9 in the ranking, Indiana came in as one of the most affordable states for retirees, ranking just behind states in the Deep South.

The article, which was written by, puts annual retirement housing, transportation, groceries and healthcare costs at an estimated $27,021 for Hoosiers. Of course, it’s only an estimation, and one size doesn’t fit all. If retirement has you racing expensive cars in Monte Carlo and deep sea fishing in Fiji, you’re going to be blowing through your money much more quickly than the retiree who is driving his 15-year old pick-up truck to fish off the pier at Washington Park. Lifestyle, health needs, travel, hobbies and whether you indulge your grandchildren with a gift card for birthdays and holidays or a shiny new Jaguar convertible, will determine for how long you can stretch your dollars.

As parents, or as grandparents raising grandchildren, it can be hard to envision that retirement will ever be a reality when expenses like a mortgage, car payment or tuition bill are staring you down. You might be thinking that you have a better chance of being hit by lightning than amassing one million dollars before retiring, and you’re not alone. According to the bestselling book, “The Millionaire Next Door” by authors Stanley and Danko, only 3.5% of the U. S. population is in that millionaire category. (But, as a former student of economics, I’m compelled to share that every little bit you save today has the potential to grow over time.)

Still, you may not realize that you have already made a blue chip investment that is far more valuable than a million times $1million. That is, your child. A child is one of the most expensive investments we’ll every make. And, a child is a little like a bank account: the more deposits you put in, the bigger will be the return on your investment.

The U. S. Department of Agriculture last calculated in January, 2017 that the cost of raising a child born in 2015 would be $233,610 (calculated for a 2-parent family). College and other post-high school education is not even considered in the equation. The $233,610 price tag of a child can be higher or lower based upon considerations like the health needs of your child, the region of the country where you live and whether your child attends public or private school. If your child enjoys the privileges (and accompanying expenses) of a lifestyle with smart phones, tablets and gaming devices, overseas studies, designer clothing shopping sprees or expensive hobbies or sports, it could make raising your child costlier.

You might feel like you should get a little break from child-rearing expenses when your children grow out of the diapers and formula stage. In reality, teens are estimated to be 3 times more costs than babies. Of course they are. When they get into the teen years, you’re buying prom dresses, auto insurance (at the “under 25” rate), sports equipment, computers and tablets, cell phones and a weekend-after-weekend bountiful feast of food for them and all of their friends. Those expenses creep up on you.

Economies of scale works with having children. This means that the more children you have, the lesser expensive they become individually – and it’s because the costs of housing, utilities and transportation is spread amongst all of the children in the household.  Way back in 1960, when the USDA started tracking the cost of raising a child, the cost came in at $198, 556. Since then, the cost of food and clothing have gone down, but healthcare and education have increased.

If, instead of having a child, you invested 1/18 of the $198,556 cost (equal to 11,030.89) at a simple growth rate of 7%, that initial 1960 investment would be worth something like $521,778.14 today, 57 years later. So, not only do children come with a big price tag, they come with an opportunity cost. Parents and grandparents (and other loved ones), give up a lot of things so that their children have what they need. But, in return parents gain something much greater than $521,778.14. That amount doesn’t even come close to measuring the intrinsic value of the first moment your baby wraps her finger around yours. There is simply no number large enough to measure that.