Having Kids vs. Retiring Earlier

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How does raising children impact the journey to financial independence? If you choose to have a family, does that mean you’ll be working forever? Does electing to have no kids, or fewer kids, supercharge your way to wealth? And, should the desire for early financial independence even play into decisions about if and how many children to have?

Raising a family is an almost instinctual decision for some people. But for others it’s a complex weighing of subtle factors including the joy of children, the work required by children, the cost of children, and the security provided by children. In the end, the decision to have kids or not, and if so, how many, is an intensely personal matter.

I wrestled with this topic earlier in life, before I made my peace with it. At that time, I wasn’t very interested in anybody else’s advice. So I will hesitate to counsel anybody on what they should do now!

But I can talk about what we did, and what I’ve seen others do. And I can discuss the implications for your bottom line, and your state of mind, of whatever decision you do make. Then perhaps some other readers with their own life experience will add their wisdom below….

The First 18 Years

We all know kids aren’t cheap. But, how much does it actually cost to raise a child?

According to the USDA’s 2012 Expenditures on Children by Families, child-rearing expenses to age 18 across the U.S. averaged $241,080 per child in two-child middle-income families. Higher-income families spent $399,780 per child. (Expenses for an only child were greater by a factor of 1.25, while those for 3rd and subsequent children were lower by a factor of 0.78.)

If you invested what the average higher-income family spends on a child annually over 18 years at a 5% return, you’d have about $660,000 at the end. So, after a couple decades, a disciplined couple could probably retire on what they would save by foregoing a 2-child family. (Only they could decide whether it was worth it.)

How much did it cost us to raise our only son? Because I’ve been logging our transactions in Quicken for more than 20 years, I can reconstruct many, though not all, of the costs. From what I can tell, our expenses were in line with the government estimates above, though our breakdown is quite different.

Quicken reports about $32K in “personal” expenses related to raising our son in the first 18 years of his life. And, based on our overall food expenses, I estimate his share of groceries at something like $72K. But the biggest item, for us, was his education.

We moved to Tennessee before he started kindergarten and were there through high school. Tennessee saved us in housing, taxes, and other costs of living. But it cost us in education. We found the public schools adequate for only a few of his years. The other years we enrolled him at various private schools, at a total cost of about $153K. It was money well spent, but it brought our total child raising costs that I can accurately track to about $257K. And this figure still does not include transportation, insurance, medical care, or housing. So it’s likely that our total child raising expenses approach the government figure for higher income families.

(If you’re interested in a more accurate estimate of your own expenses, you can try the USDA Cost of Raising a Child Calculator. It’s also based on the “Expenditures on Children by Families” report. The calculator allows you to control a number of key variables including the number of children, your region of the country, and your household income. It then calculates each major budget category and a total.)

The College Years

The cost of raising kids to adulthood is high, but it doesn’t stop at age 18 for many of us. In fact, one of the biggest variables in your childcare budget — a college education — comes next.

According to the College Board, for 2013-2014, annual college education expenses including tuition and fees, room and board, books and supplies, transportation and other expenses range from $22,826 on the low end for public colleges (In-State) to $44,750 on the high end for private colleges.

Of course there are many ways to reduce college costs, starting with savvy college shopping, then including student aid, scholarships, and part-time work.

As for us, our son earned a large 4-year scholarship to a public university, plus worked most of his semesters and summers. So he paid for the vast majority of his own college education. Quicken reports that during those years we contributed about $15K in personal expenses and about $21K in education expenses. Though it was not a trivial sum, it didn’t compare to the investment we made in his early years.

Aside from the expense, the other key impact of college on early retirement is that it is likely to remain a variable until very late in the game. The ultimate cost of college will probably be a function of your child’s developing personality, skills, and interests up into the last year or two of high school. Couple that with a volatile economy and changing financial landscape for higher education, and it is extremely hard to predict what college will cost, until it’s underway. (While my son was in high school, I created a number of spreadsheets to analyze every possible college alternative I could imagine — none of which came to pass in the final reality.)

Thus, though I was increasingly focused on retirement by my mid-40’s — really wanting out of my corporate job — I wasn’t able to target a definite retirement age because of two major variables: stock market performance, and my son’s college education. I had to be patient. It wasn’t until he was halfway through college that we had the visibility and confidence that we’d be OK if I pulled the trigger.

Your Decision/Your Life

It’s probably no surprise to learn that raising kids is expensive, and the more kids the more expense. If financial independence were your only goal in life, you’d get there faster by foregoing a family.

The majority of the early retirees that I know personally have either one child, like us, or no children. But I wouldn’t turn that into a rule. I suspect that the majority of us made our family decisions based on lifestyle and personal factors before money. And what is right for others in such a personal area, surely may not be right for you.

There are always exceptions. Today’s economic system makes it possible for a select few to earn the money required to support a larger family and still retire early. And large families, especially of the past, are famous for living frugally. After all, many family activities are inherently cheap: going to a park or playing games, compared to exotic, and expensive, adult pursuits.

How much did financial considerations figure into our family history? Frankly, not that much. We have always lived prudently and looked at life through a frugal lens. Other than that, money played no specific role in our thoughts about children. We were financially comfortable, and simply did what we thought would make us happy. And, to be honest, those decisions were made almost a decade before early retirement even appeared on my radar.

I suspect most people are the same way: They make gut decisions based on near-term happiness, without necessarily taking into account every possible financial and logistical implication. Prudence is advisable: trying to raise a large family on a minimum wage job is probably bad for the parents, the kids, society, and the planet. On the other hand, yuppie couples with dual six-figure incomes may have more time and money to raise kids than they appreciate. But, in general, I think people make decisions about children based on their personal values, and feelings, not logic.

If pressed for advice, I would suggest that somebody decide about children based on the merits, and then take into account their goals for financial independence. Adjust their financial trajectory after they’ve decided on the more important things in life. Money is replaceable in the long run; children are not.

Unexpected Treasure

Any path you choose in life will hold unexpected gifts. Fatherhood was difficult for me at first. It took some time to grow into the role. But, ultimately, it led to personal growth, great satisfaction, and some of my happiest days. And, I actually reached financial independence sooner, because I had a son.

That’s right. As explained in How I Retired Early, the apparent sacrifice I made in selling my small company to ensure financial stability for our new child, led to a steadily rising salary, benefits, and bonuses as part of a thriving larger company. So our current financial independence can be traced, in large part, to a savvy career move precipitated by our young child.

Whether we’re talking children, or any other major life decision, don’t throw away opportunities that could be the highlight of your life, based solely on financial factors.

I did retire early, and I have a great life now. But, even with all the freedom of financial independence, here’s the honest truth: The days of working a regular job and raising my son were among the happiest of my life. There was purpose, adventure, and joy in those family years that are harder to find at later stages in life.

So, in the end, I have absolutely no regrets about raising a child, even though it might have meant working longer. When I look back now, I know those were great times.

* * *

Children and money are personal and individual. You’ve just read about one of many possible paths. What’s your perspective? How do you see the tradeoff between kids and financial independence? Did you, or will you, have kids? And how has that impacted your road to wealth?


  1. We are still quite on the fence when it comes to having kids and that bothers me a bit. (Somehow I thought by age 31 I would at least know if we wanted them at some point…) And while I’m sure they would change our path to financial independence, I don’t think that’s the reason we’re so on the fence.

    • I hear you. Same feelings around that time of life. Thanks Mrs. Pop.

    • Dont worry Mrs PoP. We waited to age 35 to decide on kids or not and everything worked out well in the long run. It is scary taking that big first step, but once get by the decision, life just keeps on trucking…. I would have been happy either way, but I prefer the choice we made to have kids!

    • This is “tongue-in-cheek” but get a cat and then a dog. Evaluate…do you feel tied down or happy? If you feel tied down think long and hard about children. If you feel happy then kids might be in your future. It does not cost as much as some would have you believe as far as clothes and supplies but daycare is expensive. We were lucky in that as a nurse, I was able to work a different shift from my husband and paid no daycare ever. We did opt for a Catholic school education but my night shift differential paid for that. We also paid for college but did stipulate a public university as scholarships were not on the horizon. Luckily, a well-timed investment in Microsoft helped cover that. I am so glad we chose to have a child but if it’s not for you that’s fine. Don’t let people tell you about what you will be missing. Go with your gut feeling and then don’t second guess your decision. If you choose not to have children you can be the best ever aunt and uncle!

  2. If it wasn’t for my kids, I’d easily be a millionaire. But I wouldn’t trade the kids for a million dollars.

  3. Couple thoughts:
    1) did you calculate out your tax savings that you got for your son? I know it isn’t a guaranteed thing as the tax code can change, but our tax savings has gone a very long way to paying for our kids expenses. There is a $1k child tax credit per kid, pluss a $3900 federal exemption, and in our state a $900 state exemption. So each year i save 1k + $3900*.15 + $900*.06 = $1639/year (for 15% tax bracket). If you are in a the 25% bracket then you save more like $2029 per year. So over 18 years that is between 29.5k and 36.5k.

    2) I think there is a big distinction that fails to get made between potential costs and required costs. For you, the private school was a “BIG” expense. It is fine to make that investment in your kids, but it isn’t required. For us we are doing homeschooling with our 3 kids, which costs much less per year in actual expenses (maybe $400 a year in materials), but ensures that either my wife or myself isn’t working full time. So you could count that as an opportunity expense, but isn’t an actually paid expense. our actual expense per month for 3 kids is right around $400. I assume this will go up as they are older, but even if we average $600 a month over their 18 years that is 130k for 3 kids for 18 years. Subtract off the tax savings and you are looking at ~$40k in actually paid expenses for 3 kids for 18 years (not counting college).

    3) The Government studies IMHO do a poor job of communicating true cost as they add in a mix of “lost wages” (that don’t do a good job accounting for less taxes if you aren’t working) and child care costs (that you wouldn’t pay if one spouse wasn’t working), along with “bigger” house & car expenses, in additional to the food/clothing/etc. . .

    Everything is about your choices and priorities, but my overall point is that it is totally possible to retire extremely early and still have multiple kids. We are on target for hitting our FI goals at age 35, with at least 3 kids (we have 3 right now, but you never know 😉 ), on combined income of right around 100k.

    • Thanks Lucas, that’s great. I was hoping somebody with your perspective would chime in, showing that a frugal DIY mindset can be applied to multiple kids like anything else. Good point on taxes. We home schooled one year, but felt the private schools in our area were the best fit, especially as he got older. Obviously that was a choice, not required. As usual, government “one-size-fits-all” numbers can be a poor fit for those focused on early retirement.

  4. Ditto: I am planning on “retiring” in 2 years, at 59 1/2 and our 2 kids were an exceptional cost. Besides the basic costs until age 18, we also paid $45,000 to each of them, to help them with their college costs. We chose originally “to not have kids” for 10 years, then my wife changed our minds (). Now, I am so happy with a daughter and son that we enjoy now more than ever, as adult equals. One graduated in May and the other in December. They were very close in age. We have amassed about $750,000 in retirement savings and a paid off home. Sure we would have had a lot more money saved, but without loved ones to share life with, it is not worth it ( missing out on a family)! So, instead of sharing life with one person (my wife), I have shared it with 3 very close family members.
    Good luck to all and looking forward to retiring sooner rather than later. Great site here Darrow!

  5. “I did retire early, and I have a great life now. But, even with all the freedom of financial independence, here’s the honest truth: The days of working a regular job and raising my son were among the happiest of my life. There was purpose, adventure, and joy in those family years that are harder to find at later stages in life.”

    Your statement above is exactly how I feel. Yes, our kids cost us thousands every year. They’ve delayed our retirement. They’ve kept us closer to home when we might have traveled the world amassing countries seen and an exotic exciting experiences to talk about. As they grow older they eat alot and I don’t particularly like cooking. But, as you so perfectly stated, there is joy and purpose and adventure in all the little regular things we do each day.

    I won’t get to retire until my mid-50s at best, but like you I think these years with my kids are exquisite. Totally worth the opportunity costs.

    • Thanks jkenny. You are fortunate to be content, and wise to be appreciative of what you have, while you have it.

    • I agree with @jkenny. Our kids (3.5 years and -1 month old) have cost a lot of money. Some of that money we would have spent anyways (we would have needed a new(er) car eventually) and much of it we wouldn’t. Like Darrow, some decisions we made precipitated by our child have turned out (in our case, mostly by sheer luck) to be good decisions on their own merits (e.g. buying a house at the very bottom of the post-bubble market). Overall our household net worth has roughly doubled since we had our first child. We still find money to save, so I expect our finances will continue to improve for the foreseeable future, and we’ll still be able to retire early (target is when our first heads off to college).

      Nevertheless, even if our children did end up costing us a million dollars, if the next 18 years and beyond are as good as the last 4, it will have been money well, well spent.

  6. I think you handled this issue with great sensitivity. We are in our 50s and decided not to have children because we really didn’t want them but I don’t think it has made a big difference in our finances, it might actually have helped because I think we would have learned to live more frugally earlier if we had had children! I don’t think that finances should be the deciding factor in NOT having children, but it should be one in deciding whether to have the 2nd or 3rd child, mainly because, as you said,private schools are so expensive. Frankly, I wouldn’t send any child to most public schools I’ve seen my nephews and nieces go to, even though the teachers seem to be doing their best. As far as the decision-which-was-not-a-decision for us, we are still blissfully happy in our marriage, careers and lives, and I think that not having children definitely was a factor in that! Choose your path wisely.

    • Thanks Beatriz. It’s really good to hear your perspective in this discussion, confirmation that kids are not essential to a happy and rewarding life, just one path. And point well taken on adding the 2nd/3rd child too. It does seem that finances might become more prominent in the decision at that point, regardless of school choice. Thanks again for the comment.

  7. Our son was born 13 years ago. I was 44 at the time. I did not have kids sooner because I didn’t find the right woman to be my wife until a few years before our son came along. I am happy with our family of three. Having a child is expensive, but the cost did not enter into the decision to have a child. It just seemed like the right thing to do, and it has pretty much worked out that way.

    We have saved enough to hopefully put our son through the University of California, Berkeley. This is an in-state school for us, but is still very expensive at a current cost of $33k per year. We have more than enough to pay for that. Now if only we can keep ahead of college cost inflation. Our son has said he wants to go to Stanford. I told him he will have to make up the difference in cost.

    Due to my late start at having a family, we will not retire until I am 66. At that point, we should have enough for a comfortable retirement.

  8. At my income, my daughter costs me 1/3 of our take home income, however she does save me a ton in taxes. But that means that I am used living on a much smaller income. I save only 15% of my income but once my daughter is out of the house? My expenses will drop like a rock and it is expenses to savings that matter not income to savings, IMO. Yes, I’ll work for 20-25 years but that is still less than most people.

  9. Jon Sheridan says


    I joined the “First Time Father Club @ 40” a few years back. I’ve been thinking of this very issue a lot lately…so you’re article is timely per usual. If anything, my daughter has added a lot of joy as well as a heightened sense of responsibility to my life. More than ever, I want to get out of the corporate grinder and be available for her both early and often. I want to give her the gift of “options” down the road to pursue her passions vs chasing a buck like I’ve fallen into.

    • Thanks Jon, you hit on something that was important to me too. Making time for kids and setting an example for them. I think my own drive to financial independence was instrumental on both counts. Appreciate the good insight. Best wishes on that.

  10. I absolutely adore this post. I’ll need to read it more when I’m actually awake. 🙂 Being 30, I’m definitely in the kids-or-no-kids phase of my life. I really want kids, but the costs terrify me. I always wondered if those estimates were accurate, so this post sheds really solid light on the real figures.

    • It is an installment plan: you don’t have to pay all at once. 🙂 And, if I can summarize the comments so far, most of us didn’t make the decision based on financial factors, at least not for the first one.

  11. at 60yo I’m ready to retire anytime I feel like it, have no kids but enough for a comfortable life for us as a couple with international travel anytime we feel like it.

    Having just survived a workplace job culling, all my colleagues were discussing retirement wishes and almost all said they would if they could, but scoffed at the possibility of affording to retire in the foreseeable future. The only male without kids, I was also the only one with enough to retire on my own funds – my single female boss was hanging out for her public service pension payout to be able to retire.

    I have lived frugally most of my life, and am very happy with life, my partner and no kids.

    I’ve read that we tend to return to our median happiness with or without kids – so if you were unhappy before, you’ll be unhappy after – kids do not add or deduct significantly from our baseline/median happiness.

    I can agree with my previous boss who when asked by his teenagers ‘why aren’t you a millionaire?’ – pointed to each of his kids and said ‘there’s a million!’ and ‘there’s a million!’ – as an actuary, he would have a very good head for figures …

    I doubt you’ll find any parent commenting here that they had kids but wished they hadn’t – there seems to be a great societal taboo against saying such a thing – I’ve only had it whispered to me once by a single mother ‘in retrospect I wouldn’t have’ – knowing she was safe talking to someone with no intention of having kids.

    I love kids and they love me – friend’s kids gravitate to play with me as I probably don’t have that worried look most parent’s seem to carry as a permanent expression – and I love to return them come witching hour. Then I feel even more content.

    • Thanks Frank. Interesting about returning to our median happiness. Makes sense. I don’t believe anybody else can “make” us happy, even our kids. Congrats on your financial independence, glad you’re content, and thanks for the comment.

  12. I am in my late forties and never had kids because I didn’t want them, but it has definitely made saving for retirement easier. Having gone through a previous divorce and knowing how hard it is to be a single parent, I feel like I dodged a bullet there. I am happy in my current marriage and looking forward to early retirement to spend more time with him and our dogs.

  13. Darrow- Your article was Insightful as always! We have two boys, now 14 & 16 and all I can say is they eat a lot. I’ve noticed that both my friends who have kids and those that don’t are equally broke! We had to work harder to find ways to still be frugal and save, but I think that made us more disciplined in the long run. When you have less to spend you do a better job of focusing on the important stuff. I remember buying diapers one day and the guy in front of me was buying expensive imported beer. He looked at my cheap six pack and diapers and just laughed. When the kids met me at the door I realized that I had gotten the better deal. Later on, when the work days got long it was the kids that inspired me to get up and keep going every morning. I guess I could have a Lexus in the garage instead of my high-mileage Corolla, but in the dark they still pretty much drive the same. We still have college coming, but we are finding cheaper ways to get a good education and we have saved for it. We are transferring our kids to a school that has dual enrollment with a community college that will give them a head start. I think the payoff will come when we get that call someday that we are going to be grandparents. On second thought, maybe we should have had three!

    • Thanks for the great comment Ed. You hit on a recurring theme — that having kids can inspire us to be better with our money and/or life. There is truth to that in my experience. Thanks again and enjoy the rest of those teenage years. 🙂

      • Darrow- One thing that I forgot to mention and it is a biggy is we chose to have Mom stay home rather than work outside the home. Without a doubt, this has had the biggest financial impact on our ability to retire earlier. While we have been able to do the IRA contributions, the lost 401K accumulation with compounding is significant. We will still retire earlier, but this probably lowered our assets by at least 20% and maybe more. -Ed

  14. Thanks for the thought provoking article. As a father of 4 in the middle of the college years the paragraph regarding the college cost variable really hit home. Managing the unknowns in retirement planning is challenging enough. Add in a potential swing in college costs upwards of $900K can take your breath away.

  15. Great article Darrow. It appears to me that raising children is much like expenses in general. You are in control of how much you spend on them. You can choose to pay all kinds of fees and costs to involve them in activities, or not. For the most part we choose not, but I’m amazed how much their friend’s parents are paying so they can participate in hockey, soccer, baseball, etc, etc. Not to mention the phone/tablet communication costs each month.

    We are raising 3 children in early retirement and not spending anywhere near what the government thinks we are.

    • That’s awesome TJ. Child-related expenses are just another area where frugal parents don’t have to follow the crowd. Kids need our love and attention. Beyond that, a lot of what our culture expects us to spend is optional.

  16. I am in the middle of college years and I have mixed feelings about kids. My 2 boys had difficult late teenage years – one has stabilized and is now doing well in university and is well on his way to becoming an actuary (and a high paying job). The other has dropped out of university after blowing about 50K and is unemployed. We have to boot him out some how.

    Fortunately financially I am good place, thanks to a professional career, high paying job and some good investments.