Grandparents Paying Price for Grandkids

It is entirely possible you have become an unintended member of Club Sandwich.  Members are typically in their 50s or 60s and sandwiched between aging parents, adult children and grandchildren.  According to a study released today, an increasing number of Club Sandwich members are providing financial assistance to raising their children or grandchildren.  

The study from BabyCenter.com reports young couples are exploring ways of paying for children including moving back in with their parents or accepting money from in-laws.  “Children are expensive, but couples aren’t letting that hold them back from starting a family,” says Carmen Wong Ulrich, a BabyCenter.com financial expert. “They are exploring ways of saving that they may not have previously considered, like moving back in with their parents or accepting money from in-laws. This can be a good short-term solution for couples to get them started, but they need to make sure they are taking the necessary steps to eventually become financially independent.”

All in the family

Expectant moms would like to save at least $4,500 before their baby is born, and some are turning to their parents for help. In fact, 10 percent of moms admit to living with their parents to save money in order to start a family. And the family support doesn’t stop once the baby is born – nearly 30 percent of moms said they received financial help from their parents, grandparents or in-laws during the baby’s first year.

“Budgeting for baby is one the biggest challenges new parents face,” said Wong Ulrich. “A new baby can drastically alter a family’s financial status, and parents need to be prepared.”

Grandparent College Fund

In a related report, a study by TIAA-CREF, 40% of Americans who sought financial advice in 2013 wanted to know more about education-related topics, such as saving for education. That’s up 10% from 2012.

As it turns out, parents aren’t the only ones seeking advice. Grandparents are increasingly getting more involved in their grandchildren’s education expenses, making saving for college an extended family affair. In fact, according to the Financial Research Corp. nearly 10 percent of contributions made to 529 college savings plans are from grandparents, a substantial increase from previous years.

If you are a grandparent who worries about watching your retirement savings being depleted, there are tax benefits to opening a 529 plan.  For more information on that you can check out AARP® College Savings Solutions from TIAA-CREF, which aims to educate individuals, particularly grandparents, about the benefits of saving early and often for college.

Category: Articles, Retirement Planning