Retirement Income from the Tooth Fairy?

It turns out a good source for retirement income for today’s children may be right under their pillow. According to analysis from Delta Dental Plans Association, if today’s 6-year-olds invest all the money they receive from the tooth fairy, they could be sitting on a combined total of roughly $70 billion by the time they reach 67, the traditional retirement age.

That could mean a whopping $21,000 per child when current 6-year-olds in the United States hit retirement age if they invest all of their Tooth Fairy earnings, according to Delta Dental. The company’s 2015 The Original Tooth Fairy Poll found the Tooth Fairy visited 81% of homes in the United States. This means that of the current 4.1 million 6-year-olds, about 3.35 million received gifts.

The retirement-income figure is based on a 6-year old (average age for 1st tooth loss) receiving the national average Tooth Fairy gift of $4.36 (from Delta Dental’s most recent survey of U.S. parents of 6-12 year olds), with 6.5% in-mouth inflation (the typical increase for tooth fairy gifts from year to year) for each subsequent tooth, and a 9.6% return on investment, based on historic stock market returns (S&P 500 average) per year until they turn 67.

By region, the retirement savings will vary in line with the average 2014 Tooth Fairy gift:

  • Northeast: $20,477 (average 2014 Tooth Fairy gift of $4.16)
  • Midwest: $13,910 (average 2014 Tooth Fairy gift of $2.83)
  • South: $25,362 (average 2014 Tooth Fairy gift of $5.16)
  • West: $23,004 (average 2014 Tooth Fairy gift of $4.68)

According to Delta Dental’s The Original Tooth Fairy Poll, the average Tooth Fairy gift reached a record high last year, up 24.6% from 2013, when the average gift was $3.50.

Ayo Mseka