Working grandparents who are providing financial support to children and/or grandchildren are risking their own plans for retirement, says Craig Bannon, director of financial planning centre of expertise at the Royal Bank of Canada.
“[They might need to] delay their retirement to extend their earning years or continue to work on a part-time basis in retirement.”
Nearly a third (30 per cent) of Canadian grandparents have provided money to their grandchildren and 21 per cent are currently supporting at least one adult child aged 25 and older, according to a new survey by the RBC.
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The survey, which polled more than 1,500 Canadian grandparents both working and retired, found 70 per cent said their adult children expect them to help cover necessary costs — such as food and clothing — and 54 per cent are providing this money at least monthly. Two-fifths (39 per cent) are providing support for their grandchildren’s education expenses, followed by everyday living costs (30 per cent).
More than half (54 per cent) said they’re sacrificing their own savings to provide family assistance, 52 per cent have made or would need to make significant lifestyle changes to continue providing this assistance and 33 per cent said they’re worried they’ll run out of money to maintain support and cover their own costs.
While it’s not unusual for grandparents to provide financial support to younger family members, this support is now being provided to help pay for necessities rather than ‘nice to haves’ due to the rising cost of living, notes Bannon.
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Just 37 per cent of grandparents reported reviewing their finances to see what they could afford to provide and only 20 per cent considered the impact to their retirement plan. Notably, many respondents admitted they don’t know how much money they’ve provided to their adult children (43 per cent) or grandchildren (34 per cent).
Bannon says if employers want to support working grandparents, they can provide savings plans that include matching contributions for employees, if they aren’t already doing so. This will help take some of the burden off the employee when they’re feeling pressure from their family.
Providing employees with access to a financial advisor can also be of great assistance, he adds. “An advisor can help grandparents walk through their current and future sources of income . . . and explore options to see how they can continue to provide support to younger family members [while still achieving] the lifestyle they want in retirement. It’s important to understand how any financial support they’re currently providing may affect their savings and their ability to cover future costs.”
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