How Grandchildren Can Spoil Your Retirement Plans

For those without enough money to retire, one solution is to keep working.  However, life often gets in the way, and health issues or unemployment can make it impossible to work.

Another factor that can interrupt retirement intentions are grandchildren.  According to a new study from American University, women are more likely to retire when their children have babies, and if women age 59 to 61 are helping care for their grandchildren, they are 29 percent less likely to be working full-time. 

Because of recent economic trends, this signals trouble.  A new baby, rather than a layoff or preexisting retirement plans, is the catalyst pushing grandmothers to offer help with childcare.  These women help out not only because they love their grandchildren but because their children need assistance with parenting.  Although the arrival of a child can trigger the grandfather’s retirement as well, the cost of early retirement may be higher for women than men.  Women live about five years longer, meaning their savings will have to be stretched out that much longer.  Furthermore, they tend to earn less, and they generally interrupt their earning years to stay home with their own kids.  Under these circumstances, women may need to work into their late 60s to save enough for retirement. 

See Ben Steverman, How Grandchildren Botch the Best-Laid Retirement Plans, Bloomberg, Jan. 7, 2014.