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Hitting Up Grandpa
The tough economy has caused people to look for money in some unusual places – like hitting up Grandpa. A significant number – about 62 percent – of grandparents say they have provided financial support to their grown children or grandchildren over the past 12 months, according to a study by www.grandparents.com. The study says that 70 percent helped with daily expenses, 40 percent helped with mortgage or rent, 24 percent provided help with health care, 23 percent covered day care costs and 21 percent helped pay for education. This is a much higher percentage than in recent grandparents.com surveys.
Another survey, this one by the MetLife Mature Market Institute, a research arm of MetLife, found that grandparents have given their grandchildren an average of $8,661 over the last five years.
In the MetLife survey, reasons for financial support included: general expenses, 40 percent; education, 26 percent; a wedding or other major life event, 21 percent; savings, 13 percent; medical bills, 9 percent; and car expenses, 9 percent.
Both grandparents.com and MetLife note that many of these grandparents are fairly young – in their late 40s or early 50s – and still working, so they probably are not tapping into their retirement nest eggs. However, they might be using money that they would otherwise be saving for their own retirement.
Many of the people surveyed probably have more than they need and can spare some for their children or grandchildren. However, many others might be jeopardizing their own financial futures. In this case, financial experts caution against being so generous with children or grandchildren that you create financial problems for yourself down the road.
If you are still working, you are diverting money from your own retirement savings, which means you will have to work longer to end up with the amount of money you need to retire. If you already have retired, you are using funds you have earmarked for your own support as you age.
Experts urge people who are nearing retirement, or who have retired, to keep your financial focus on yourselves. Don’t give money to your children or grandchildren unless you are certain that you have enough for a comfortable retirement.
If you can’t afford to give money to your adult children or grandchildren, consider whether you can help out in other ways, such as providing child care or using your connections to help them find a job.
Finally, encourage them to take financial responsibility for their own lives. In the end, that could be the best support of all.