Children Vs. Retirement

October 9, 2007 at 8:39 pm 2 comments

I engaged in a discussion today with Jared about retirement and our goals of what age we are aiming, hoping and realistically thinking we will be able to retire at. Our answers were pretty similar, but I made the remark that without the wife and kids – of which I have none at the moment, but plan on having down the road – you could reduce your retirement age by a significant amount, say 10-15 years.

In doing some quick research, we estimated that a child born today costs approximately $300,000 to raise to the age of 18, including some college. Spending 300,000 over 18 years translates to about 16,700 a year in expenses. If instead, you invested that 16,700 every year for 18 years, assuming 7% return, compounding once a year, you would have saved over $600,000.

With Children:

  • Have 2 kids, one at age 30 and one at age 32
  • By age 50, you have a 20 year old and an 18 year old and have spent approximately 600,000 in raising them
  • Net Output – 18+ years of memories; 15 more years of work


  • Save the same amount you would be spending on children (assuming 2 from the example above), average 7% return, and at 50 you’ll have saved up a nice nest egg of $1.2 million.
  • Opportunity cost of raising 2 children: ~ $1.8 million

Granted, over that 18 year period you won’t be living better than you would be with children because the money would still be put out of your reach (spending it with kids, saving it without). Although one could argue that if with children you aren’t saving at all, you’ll have to work much longer after their 18th birthday to retire. In the no-kids example, you could be using the money you would have been saving for retirement in the kids example to fund you “better” lifestyle.


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2 Comments Add your own

  • 1. Lerch  |  October 19, 2007 at 5:57 pm

    Some would argue that having kids is the “better” lifestyle.

  • 2. steveconroy  |  October 19, 2007 at 8:58 pm

    That’s why “better” is quoted, implying that that lifestyle may not actually be better. It’s all a matter or personal preference.


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