Introduction: Being a grandparent is special in many ways. It sometimes means overspending and spoiling our grandkids. We tend to cut down on other expenses rather than buying gifts for our cute little ones.
What’s so special about being a grandparent? Grand parenting brings along with it opportunities for loving a new person, the magic of childhood, play and fun and the joy of parenthood minus the heartache that often goes along with it. It is also an opportunity to share your hobbies with a young, curious mind, watch as the kids grow and develop, provide encouragement and make an impact, draw upon your breadth of experience to guide the child through life’s challenges. Many grandparents, in today’s graying America, provide care for their grandkids while mom goes off to work. This can be a very enriching experience for both.
Why do we overspend on our grandkids? A 2012 study by AARP shows that 89% of grandparents spoil their grandkids. USA Today says that 40% of Americans spend $500 or more per year on their grandchildren. Some grandparents even pay for their grandchildren college education and afterschool activities, such as piano lessons and dance classes. Grandparents often find themselves in a dilemma where they would like to be there for their adult kids financially but don’t want to jeopardize their retirement savings.
Where can I cut on spending?
- Give the gift of time. It doesn’t always have to be a gift. Going on a hike together or doing a baking project can be a very memorable one for the two of you, much more so then a gift. Share stories. Your grandchildren will be delighted to hear stories about when their parents were children. Get with the times and learn to text and build a relationship that will last.
- Make a budget. “Making a budget is the most important thing you can do because then you will be able to understand where your money is going and where you can afford to make cuts,” says Meg Favreau, senior editor of Wisebread.com. Grandparents should not fall into the trap of overspending on their grandkids. “If it’s affecting your ability to meet your obligations or is dipping into retirement savings, that’s a sign that it’s excessive spending,” says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. For full article, click here.
Save your retirement for the fun things in life. Very often, without proper planning, our retirement funds get totally wiped out down the road if a loved one requires long-term care. Medicaid will usually cover for many types of care, including in-home, assisted living and nursing home care. They will however “look back” for a period of five years prior to application to uncover monetary gifts granted- “spent down” during that period, in which case they will impose a penalty corresponding with the gifted funds. Plan ahead and gift the monies to your loved ones now, so it doesn’t hurt you in the years to come. A Medicaid planning company like Senior Planning Services can guide you through the application process if you’re eligible and help shoulder the burden in these stressful times.
Conclusion: Being a grandparent is one of life’s most meaningful pleasures, but it can also be a juggling act. Knowing when to educate, when to spoil, when to stop spending, when to “spend down” and when to save your retirement funds; are all part of this blessing called grandparenthood.