Will My Expenses Decrease as My Kids Get Older and We Approach Retirement?

As parents, there is every expectation that children will cost money and a lot of it. Almost everywhere you turn, data estimates that children will cost hundreds of thousands of dollars to raise from the moment they are born until they turn 18. 

In the case of one Redditor posting in r/ChubbyFIRE, they are rightfully asking if and when child costs start to decrease. As a parent of two children, I can personally say that it sure doesn’t feel like it ever begins to cost less. Thankfully, the reality is that everyone’s situation is different, making this question pretty challenging to answer. 

The Current Cost of Living

According to the Redditor, they have a net worth of low seven-figures, and have two children, ages 6 and 2. Between the Redditor and their spouse, they have a household income between $200,000 and $230,000. There is a chance the income could increase this year to $300,000 and then gradually return to closer to $260,000 annually moving forward.

The family’s annual spend is around $150,000, which includes a $2,220 monthly mortgage payment. While the mortgage won’t be paid off for another 20 years, the family isn’t accounting for this money suddenly becoming free cash flow. 

Even with the kids in public school, there is a genuine concern about the kids’ expenses decreasing. It’s pretty clear that the Redditor is feeling the heat of raising two children, something millions of Americans would understand, including me. 

The ultimate question this Redditor wants to know is whether expenses for children ever decrease. The answer, unfortunately, is that it depends. 

It’s All About Circumstances

Ultimately, the real question here is when the kids will move out. If this happens when they turn 18, then it depends on whether they are self-sufficient and work. The same applies when they attend school, and whether the Redditor and spouse are contributing to the costs of room and board, living expenses, entertainment, etc.

Of course, this all focuses on ages that won’t occur for another decade and a half. Until the Redditor’s kids turn 18, there is every reason to believe that costs will only continue to rise. You have school supplies, clothes, more food, a car, car insurance, and so many other expenses.

The Redditor also knows they have to factor in a 529 college savings plan, which they say they are budgeting for separately. Still, this is an expense associated with raising children, and the Redditor needs to account for this expenditure. 

Perhaps most notably, we are currently living in a moment where children who had left home once before are now moving back after losing a job or finding life unaffordable. This means parents are assuming the cost of young adults in their 20s and 30s, which they thought they had stopped paying for. 

How to Move Forward

The first thing this Redditor needs to do is create a detailed plan of expenses, so he knows for certain where the money is going. While he’s factoring in insurance, I wonder if he’s factoring in long-term care insurance, which could cost hundreds of thousands of dollars per year if one of the spouses needs extra care.

With the understanding that their costs aren’t going to decrease for the foreseeable future, they need to plan accordingly. This means taking a long, hard look at their retirement timeline and over budgeting in case the children stay at home a few more years than expected. This means that their financial plan must include a reasonably significant buffer, both for healthcare and potentially for family-related expenses.

For now, setting up a household budget that clearly shows where the kids’ expenses are focused may help identify some areas for reduction. Instead of paying $1,500 per month for activities, maybe they can reduce this after the wife retires and spends more time at home entertaining the children. There are a lot of potential options, which will only be found with a budget on paper, so that they can be visualized in one place.