Grandparents, start your savings.
If you hope to be a grandparent one day, be sure to contribute a little more to your retirement fund because having grandchildren is an expense you may not have considered.
A recent study organized by The Senior List revealed that grandparents spend an average of about $4,000 a year on their grandchildren.
Out of the 1,200 grandparents surveyed, 10% admitted to giving $10,000 or more to their kin.
The yearly contribution covers the cost of gifts, clothing, shoes, entertainment, dining out, vacations, college funds, extracurricular activities, and supporting large purchases.
Results show that 96% of grandparents support their grandchildren in some capacity, even if it puts them at a financial disadvantage.
Supportive grandparents report that 1 in 5 feel pressured to contribute more than they can afford, with 10% taking on debt or delaying their retirement to help the grandchild.
Despite overextending themselves, grandparents find the contribution to be worth it, 63% of them say their grandchildren’s happiness is worth any financial sacrifice, and 26% of people live more frugally so they can support their children’s offspring.
Grandparents find it beyond rewarding to watch their grandchildren prosper, even if it means postponing retirement, which half of them were willing to do, or 40% would come out of retirement to support their kin.
Some elders have even taken on an additional role as parents; 16% of grandparents have at least one grandchild living with them.
However, due to the unstable economy and inflation, 32% of grandparents have scaled down their financial contributions, and 7% have increased their support to assist with the increased cost of living.
Patty David, the Vice President of Consumer Insights for AARP wasn’t surprised about grandparents having to cut back their monetary gifting.
“In 2018, when we ran our last grandparenting study, the average spend was about $2,600 a year,” she says. Six years later, the fact that the number has gone up to $4,000 is expected, David told Parents.com.
Although grandparents want to be able to assist their grandkids, they should consider how much they can contribute without diminishing their personal finances.
A few options that grandparents can consider are investing, opening college savings accounts, estate planning or using the grandparent loop, which allows grandparents to use a 529 plan to fund a grandchild’s education without affecting the student’s financial aid eligibility, describes USA Today.
Regardless of the dollar amount grandma and grandpa can give their grandbabies, they value their relationship and time with each other over the expense.
“There are numerous ways they can do that without spending large amounts of money. Roles of the modern grandparent consist of being a source of wisdom, conveyer of the family legacy, a friend, storyteller, teacher, mentor, and caregiver,” David concluded.
