Parenthood is hard! But that truth makes grandparenting a joy for so many. I’ve heard many grandparents in my office talk about the joys of being a grandparent, while citing the reality that you get to have all of the fun without the same amount of responsibility! But for more than 3 million grandparents in the United States, the line between grandparent and parent has been closed and they now find themselves as the primary caregivers for their grandchildren.
Regardless of the situation that led to you becoming a parent for the second time, here are some things to consider that will make raising children possible without creating undue difficulties to your own financial standing.
Understand The Change in The Relationship
It is important for children to have grandparents in their lives. Grandparents provide an important perspective for children, bringing valuable life lessons to their grandchildren. They also get to have a little more fun than parents! But when a grandparent becomes a primary caregiver, the relationship needs to change. The change will be an adjustment for both you and your grandchildren so don’t try to overcompensate by changing expectations or by gifting in excess. As a parent, you need to adjust expectations and be sure to model the responsibility that you want to see reflected in your grandchildren, especially when it comes to finances.
Don’t Take on Extra Debt
Especially if you are in your 50s or later. The final decade prior to retirement is a time to pay off all debts and increase savings. At this stage in life, you only have a limited amount of time that you can course correct and recover your savings. While expenses will increase with additional dependents in your home, it is important to avoid excessive and unnecessary debts that will derail your financial plan.
Update Your Financial Plan
If you are already retired and on a fixed income, reach out to your financial advisor to adjust your plan accordingly. Your financial advisor can help you update your budget, as well as your life insurance policy, estate plan and your beneficiaries. Your circumstances may have changed but it doesn’t mean that your personal financial goals need to change also. If you are providing more than 50% of support to your minor grandchildren, they can be claimed as dependents on your taxes.
Assemble A Team
Recognizing the importance of community is as important as ever for grandparents raising their grandchildren. Surround yourself with a support team that can help you adjust to and navigate the new life. Start with trusted family members that can provide assistance with care. This may include aunts, uncles, close family friends, church members, or other community groups. It is also important to have a family lawyer to help you understand your rights and responsibilities. Round out your team with a financial advisor to help you take care of your own financial goals. You’ll quickly learn that there is no shortage of individuals who are willing to help you!
The circumstances that lead to a grandparent taking primary custody of grandchildren can be difficult and unpredictable. It is best to prepare for the possibility instead of assuming you will never be affected. Take the time to have the difficult conversations with your own children. Make sure their wishes for their children are known and that their financial plan is in order, including a life insurance policy. If you find yourself in need of assistance in navigating this call, Anchor Wealth’s financial advisors would be happy to talk with you.
Rianna Caswell, Wealth Advisor