Your kid’s $500-a-month hockey (or lacrosse) habit is dooming your timely retirement
Invest that amount for 10 years and you’ll have $200,000; let junior play on school teams
Kids’ play is killing their parents financially.
And parents know it. Two-thirds of parents with at least one child in a youth sports program report that the cost of coaching, equipment and travel is eating into what they should be saving for retirement. According to a survey conducted for TD Ameritrade, more than one in four households spend more than $500 a month on extracurricular sports. Another 53% spend between $100 to $500 a month. Per kid.
A new survey sponsored by the Aspen Institute and the Utah State Families in Sports Lab found the average annual per-kid spending was about $700 across 21 sports, with ice hockey ($2,582) and skiing (2,249) leading the way. Of course, averages can hide some wide ranges. The report notes that in six sports – baseball, gymnastics, ice hockey, skiing/snowboarding, swimming and tennis – some parents fessed up to spending more than $12,000 a year for equipment, lessons, camp and travel. Again, that’s per kid.
A household that reroutes $500 a month from sports to retirement saving for 10 years, letting those dollars compound, will have more than $200,000 in 30 years, assuming a 5% annualized rate of return. (There’s also likely a whole lot of foregone retirement savings in the car you’re schelping the kids around in, as the average car monthly car loan is north of $500 a month.)
Plenty of parents are guilty of a bit of magical thinking that this won’t be a sunk cost. One-third of them expect (not just hope, but expect) they have the next Simone Biles, Zion Williamson or Naomi Osaka. C’mon. A tiny, single-digit percentage of kids ever go pro or to the Olympics.
Or, parents tell themselves that participation will boost college scholarship odds. Half of parents with children in a youth sports program said they are relying on this payoff, yet just 11% of parents reported their kid got an athletic scholarship. (Note: Sports participation can help a child get accepted to a college they otherwise mightn’t get into.)
Then there’s the common strategy/prayer that this is one more trade-off that comes with parenting that can be made up on the back-end. One in five parents surveyed say the cost of youth sports has them planning to delay retirement. That’s a popular strategy that can be risky given job insecurity once you cross into you 50s. An analysis of government data by the nonpartisan Urban Institute reported that more than half of workers lose at least one job after they turn 50, and very few ever make as much once they get the next job.
Complicating the “We’ll catch up on the savings once the kids are grown up” strategy is that grown-up children increasingly still get a financial assist from parents. Research from Merrill Lynch and Age Wave reported that parents with adult children continue to help with costs including rent, vacations and car payments. And, as with the TD Ameritrade survey, parents are well aware that this is eating into what they need to save for retirement.
There is no question that participating in sports has all sorts of upsides. Starting with the fun factor. And in the here-and-now it sure seems like a better extracurricular than holing up inside and gaming for hours. (Yes, a teen recently won $3 million in the Fortnite World Cup, but that’s clearly not the norm.)
Competition and the work ethic of committing to training are valuable life skills that will never age out. And for many kids who choose team sports, the dynamics will play out again in team-building (and survival) at work.
But at what cost? No parent wants to deny their children. Especially something as positive as sports participation. Yet what gets overlooked is what parents end up denying themselves in building financial security.
At a minimum, taking a clear-eyed look at how sports costs impact a household budget is a first step in rethinking things. For a four-season jock, choosing one sport (at least for organized participation), and then setting a maximum monthly outlay is one option to start controlling costs. And in the off-season, have a teen work a bit to contribute to the cost of in-season play. That way, your teen will have skin in the financial game, as well.