Last Sunday, September 7, was National Grandparents Day, and they certainly deserve a collective cheer for all they do to help raise the new generation in today’s very challenging financial environment.
Grandparents are helping out like never before. My neighbor, who retired a few years ago, now babysits her two grandchildren during the week so their mother, a physician, can go to work confident that her children are in good hands.
A long-time client, also retired, steps in to take care of her two grandbabies when their mom, a police officer, has to put in longer hours on the job.
We have other clients who help out with “extras,” like paying for the weekly dance class, pitching in for that special school trip, or tucking a little extra into the graduation card.
And there is no place that grandparents are helping out more than with college savings. Just today, we talked to a client who intends to fund college using the Florida Prepaid Plan. He’s already covered expenses for one grandchild, and now wants to pay for two more grandkids in full.
College 529 savings plans are also extremely popular, and remain one of our favorite ways for grandparents to help out. “It’s a smart move for estate planning because the grandparent can get assets out of his or her estate without giving up control,” says Forbes contributor William Baldwin.
According to research from Fidelity Investments, more than half of grandparents plan to help pay for college costs. Almost all say they would be likely to contribute to their grandchild’s college savings fund on special occasions, like birthdays, in place of other gifts.
Don’t Forget: We like to work with clients to pick the best way to save, the top plans, and the right amount, so their help makes a huge impact without hurting their own retirement prospects. Plus, it can be tricky to navigate college savings plans in light of existing rules on financial aid, limits on taxable gifts, and of course all the investment considerations, so it’s always good to check in with us to review the options before moving ahead.