If you’ve given your children and grandchildren financial support over the years, have you ever calculated exactly how much?
In a recent article in the Minneapolis Star Tribune, Kara McGuire wrote that nearly two-thirds of America’s grandparents were providing an estimated $370 billion in financial support to their grandkids over the previous five years, according to a survey by the MetLife Mature Market Institute. It’s hard to wrap your mind around those numbers, but it averages to over $8,000 per grandparent household.
With pensions declining and more seniors having to rely on their savings, McGuire asks whether grandparents can afford it. Her question is important because often it’s hard to say no to our families when they need our help. Most of us would rather help our children and grandchildren while we’re alive and can see the benefits rather than leave them a lump sum inheritance after we’re gone.
But that’s a concern to Sandra Timmerman, director of the MetLife Mature Market Institute. “Grandparents need to think about their own retirement before giving away too much money to their adult children and grandchildren, because it will come back to bite the family eventually.”
Timmerman is referring to a fear most retirees have of running out of money. With health care costs rising and investments declining, it’s difficult to estimate how much savings we’ll need. None of us want to see our children struggling to make ends meet and yet we don’t want to rely on our children to take care of us in our later years. So it’s a dilemma for both generations. The solution may be to sit down with your children and have a frank discussion about finances. If you’re open and honest about what you’re able to offer, then it will be easier to say no when unrealistic requests are made.
How do you handle monetary gifts to your children and grandchildren?