The Cost of Being a Grandparent

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Today, we're gonna be talking about how to be a good grandparent financially. Hello and welcome to Money Talks. My name is Ken Wink from Summit Financial Consulting. If you'd like more info about what you hear during the show today, be sure to check out our website. Go to the podcast page. You can see our old shows and you can subscribe on Apple Podcasts, Spotify, or Amazon Music. So being a grandparent is pretty sweet. Sort of get to relive being a parent, but this time you sort of get to Just enjoy all the joy of raising children, but you don't have all those obligations. You don't have all that stress. And as for the grandkids, you know, those of us that have had grandparents that we know and love, you know, it's just a great time to spend time with an adult who cares about them and loves them. is interested in them, but usually doesn't discipline them quite as much. So during today's show, we're just going to be talking about how to be a good grandparent when it comes to your finances, because sometimes these grandparents get a little bit carried away. But before we jump into that topic, let me introduce my co-host, Tony Shore. Tony, what kind of grandparent are you going to be taking them on trips, spoiling them with gifts or paying for their college? What are you going to do someday here?

It depends on them. Are they great kids or not? I mean, are they worth it? I'm kidding. I will love all of my grandchildren and I hope to have grandkids someday. I'm not there yet. But yeah, I mean, I want to do things with them. I don't know about. you know, if I'll be in a position to financially do a lot or a little, but I know that I want to do things with my grandkids. I mean, I saw, you know, my mom and dad did a lot with our kids, but they didn't have to take them to Disney world or, you know, around the country either to do it. It's really time spent with them and they had a farm. So that was very, because we live in, you know, the city and we go down to their farm and the kids would, you know, my son as he grew would ride the go-kart and he got to go on the tractor with my dad, and that my daughters loved riding the horses that my mom had and seeing the llama and the goats and the chickens. So all of that

Yeah, I mean, parent paradise. Oh, my God.

Yes, it was. It was. And I remember what my grandparents did to me. So, you know, and what you remember is the time spent, to be honest. Oh, absolutely. Yeah. Yeah. How about you? You're a long you're even further away. I mean, my daughter's 13. So we'll see.

We got a long way away.

Got some time. Yep. But how about your parents with your daughter? I mean, how about your daughter's grandparents? What do you see them doing things and spending money on your kids?

Yeah, it's mostly time spent, like you were saying. I remember my daughter was in kindergarten and we had something going on. My wife had something going on and we dropped her off at her great grandma's house, which was Nana. So 100 percent Sicilian Italian lady. Oh, and she's like, oh, Charlotte, we're going to be making raviolis from scratch this morning before I take you to school. And I was like, Charlotte, do you have any idea how lucky you are to be making fresh homemade raviolis with your Nana? And she's like, Oh, I bet all my kids and all over the world are making raviolis with their Nana's right now. And I was like, no, there's, there's, there's probably not any preschool kindergartners making homemade ravioli.

That number would be zero or one. That number would be one. And that's you. Yeah. Yeah. Yeah. You are so lucky. Yeah. That's it. Yeah.

I'm a stats guy. I was like, sorry, Charlotte.

You've got the actuary tables for it out. Preschool kids making homemade raviolis right now. Actuary table says zero. So she's actually beating the odds. The odds of that happening right then were zero. But yes, she was doing it. I remember with my parents, we have three kids. And when they were little, my parents, their grandparents... We would take them down to the farm and my mom would give them donuts and let them eat the donuts all day long. Breakfast, lunch, dinner. Let them eat. She'd have sugared cereal for them, like Froot Loops. I'm like, Mom, what are you doing? I go, you never would let me eat donuts for lunch. You would absolutely not allow that. Yet you're doing it with my kids. And she goes, yep. Isn't payback great? For all the hardship you put me through. She goes, Oh yeah. She goes, that's different. That's different. You are my kid. These are your kids. I can spoil them.

Yeah. My mom's Cinnabons and desserts and fresh baked cookies and brownies. And it's like, we weren't, we, all we could drink was a skim milk and skim milk and our Cheerios, you know, zero grams of sugar. And like, now she's just opened up the sugar chest and

Exactly. Exactly. What happens when they become grandparents? They're like, we don't care. We're going to sugar them up and send them home. And I just picture my mom like this, like an evil genius, like I will load your children full of sugar. Then you'll see what we had to deal with.

So far, the listeners, the grandparents are like, OK, create tooth decay. Got it.

Yeah, yeah, exactly. Make sure you're going to need a huge sugar budget. That's why you have to work with a financial professional like Ken Wink, because you're going to run out of money. You'll buy so much sugar products. OK, so, you know, I know a lot of your clients are probably already grandparents or likely will be. So I think this is going to be good. Where do you want to start, Ken?

Just a stat. So we started doing some research on how often grandparents actually help their grandkids. And we found one survey that said 96% of grandparents reported taking on some type of financial cost for their grandkids. And the average is $4,000 a year. So that number blew me away.

If that's the average with people, these people are on fixed incomes.

Right. Yeah. That's what's crazy about that.

Yeah.

Yeah. And maybe, you know, like some people have 10 grandkids. So like you just figured birthdays and Christmases and little, you know, little things here and there. But then there's grandparents who we have clients that take their whole family on a trip to Disney World or Florida or whatever. Myrtle Beach somewhere every year, more likely every other year. But they they budget for that. That's what they enjoy. And they're around.

You'd have to budget for that Disney World. I'm just I'm here to tell you that my mother in law took her children and all their kids and paid for all of us to go to Disney World, including herself. And an Airbnb, Disney World, all the tickets, all the parks, the flights, that number is astronomical, the cost.

Yeah, it's like the home of the $25 peanut butter and jelly sandwich.

Yeah, I think there were 16 of us, 17 of us. I mean, that's a lot of money. It is a lot of money. It's stupid money. So but you know what? You can't take it with you. And she wanted to do. I think it's smart to do things like that while you're still healthy enough to experience it with them. Right.

Absolutely. Absolutely. Yeah, if you start and, you know, that four thousand dollar number like that includes a lot of different things. So, you know, there's large purchases and maybe they're like buying their first car or buying their first house. And grandma and grandpa just want to help out. There's tuition. There's helping them with their rent and travel and school loans. Yeah. Help them with their first Roth IRA gifting clothes. Oh, my gosh. My mom just spoils these kids with clothes. I'll take my daughter shopping. Awesome. That's always great. You know, let's all go out to dinner as a family, sometimes health care. You know, they grandkids sick and parents are in a tight spot and grandma and grandpa will come to the rescue. So sure. You start adding up all these different categories and all these different potential things that can pop up that can tug at grandma and grandpa's heartstrings. You know, the four thousand dollar number starts to get a little bit more understandable, I guess, after the shock value wears off.

Yeah. Yeah. I mean, in some circumstances, it's going to be way more than that, which is also crazy. So I know you mentioned a survey you're talking about. Do you or the survey have any insight as to whether or not some grandparents have to sacrifice to provide these things for their grandkids?

Oh, yeah, for sure. So what we found and we've seen it with our clients, we take care of over a thousand families here. So there are families that because of this stuff, now they're reducing spending on other things. Maybe they're not going on as many vacations because they're helping out grandkids so much, obviously taking money from their investment accounts. We have had people that have delayed their own retirement because they are so busy helping out their grandkids and sometimes their kids too. That's a whole different show, but you know, and in rare circumstances, they'll actually take on some debt just to help out their grandkids, you know, get a, get a home equity line of credit or something like that to just really help out because they just they love them and they want to help. And that's what parents and grandparents will oftentimes do is just make some big sacrifices for their family.

Yeah. Yeah. And that's that's interesting. And the statistics are incredible, really. I mean, it seems clear to me that Hey, if helping your grandkids is on the horizon or potentially on the horizon, it's essential to work with somebody like yourself, especially if you're going to be pulling money out of your retirement funds. You've got to have a plan in place. And it really the key here is make it a part of the budget beforehand. Like. when I were in retirement, I want to do this with my kids or in two years, I'm retired in two years. I want to take, you know, all my kids and grandkids to Disney world. Like my mother-in-law did. Well, she had to go to her financial advisor and talk to him about that. And, and she did that well in advance. And she, And he said, yes, you can do this and not have to worry about running out of money in retirement. So she did. But you have to have a plan. No matter how much money you have or how little, you just need a plan for what you want to do and can do. And you need a plan. an unemotional expert, a third party, like a financial advisor on your team to consult with, to make sure, right, that you're not jeopardizing, harming yourself because you want to be there for your grandkids. You don't want to be a burden on them. So you want to make sure you've got the money to do it.

Right. Right. It's very, very important to have a plan. And when you look at all of your expenses that you have as a retiree, we got to be looking at health care and property taxes. And those are typically going up and they get to be big numbers the longer that you live. So you have to have a comprehensive plan and just. When we first sit down with people, we tell them, tell me your daydreams. Tell me what you really want to do once you're retired when it comes to special spending. Is it vacations? Is it helping with college? If it's college, then we've got to take a good hard look at 529 plans because then they can grow tax-free. A very low percentage of the population actually takes advantage of 529 college savings plans. So you're leaving money on the table if you're not, if that's one of your goals. So putting a comprehensive financial plan together that takes into account all these special expenses and then some breathing room for gifts. Every time we sit down with a new client, we go through every, how much are we gifting every single year? What are we going to spend on vacations? What are we going to spend on purchases? Your cars or cars for grandkids? Let's budget this all in and make sure that you're not going to sort of sink your own boat here. here because we've got to have financial security.

Yeah. Yeah. And if they come to you before, hopefully they come to you before they're retired and get a plan in place. And then you can ask them, hey, how many kids do you have? When they tell you they have seven children who are planning on having a lot of children of their own, then you go, well, you're going to need to work 20 more years. Right. No, I'm kidding. I'm kidding. Hopefully they won't have to work 20 more years. But you know what I mean? I mean, if you're if you have a large family and are planning on having a lot of grandkids and you're planning on taking them on trips, you got to talk to your financial advisor. Let them know that's part of your goal, part of your dreams. And then plan for it.

And I know we're sort of talking about the negatives and like how important it is to plan because it can ruin everything. But we definitely want to overemphasize to our listeners that giving it almost always builds bonds. Like as when that grandchild receives financial support, or a gift or a vacation or a sports game or, you know, like I always remember going to a Detroit Red Wings game with my grandpa. He lived in the upper peninsula of Michigan, drove down 10 hours to a Red Wings playoff game actually together. And it's just one of those core memories that are burned into my mind. So it's good to, good to make core memories. We want to have lasting, you know, and it's not like a, Loved him anymore because he did that. But it's just a nice, nice little smile memory, Tony. So we want to try to make memories any which way that we can, whether it's petting the llama or going to see a sports team. We want to create a legacy beyond just, you know, you can't take it with you. You don't want to just hoard it all and have them get it when you're gone. But this is a really important part of everyone's legacy.

Give while you're here to see them enjoy it. That's the thing. And again, it's less of the money amount spent and it's more of the time spent. But at least for my grandparents, I mean, my greatest memory of my grandpa Whelan was him taking rides with just my grandpa, he would drive to the springs, the natural springs to get spring water and Adrian. And we go up, there's this area where people go get fresh spring water. And it was amazing. There was a natural springs and people would go fill up their jugs. It was crazy. I mean, to think of that now, nobody does that now, but it was a thing. And we'd do that on a regular basis. It was a fun drive because we'd stop and he'd let me get some, little treat at the, in Adrian at the, the big red barn, which was like a gas station and a store. And I mean, you know, those types of things are fun memories, but it's just spending time with your grandparents and spending time with your grandkids, I think. And, and, you know, we can talk about the, the, there are really heartwarming benefits to helping out your grandkids financially, like you're saying, right?

Yeah. Yeah. Yeah. And it's, you know, it doesn't have to all be spending. One of my other core memories is my grandpa was pulling me around in a wagon. He was very focused on exercise and would go for a one to five mile walk every single day. But he's like, OK, Ken, we're going we're going for this this ride. I'm going to have you in this little red wagon and I'm going to pull you. Oh, wow. And he's like, you hold the baseball bat. And I'm like, Grandpa, why do I need to hold a baseball bat? He's like, because a dog that lives a mile away last summer. Oh, no. I needed 18 stitches. So you hold the bat in case we need the bat. And I was like, oh, my gosh. Assuming he was just going to wave it at the dog, Tony.

Oh, yeah. He's just waving it to scare it away.

Yeah.

Oh, no. That is a crazy memory. One of my favorite memories. My grandpa on my dad's side, Grandpa Shore. I just have to tell this. And I maybe even have told this on the show before. I hope not. But. Because when he passed, I spoke at his funeral, and this is the story I told, and so many people commented on it. But my grandfather was known by everyone, and he was really a Renaissance man. He did everything. He was a farmer. But he also rebuilt combines that have been rolled or big corn and soybean combines, these huge, huge combines that farmers use. And he had a huge shop where he'd hoist up the engine, rebuild them because there was a local tractor salvage. And if they get a burnt or rolled combine, he would completely restore it. And he chopped down trees from his own black walnut forest. He planed them, made the boards and made all his cabinets and trim in his house. He built a grant, beautiful grandfather clocks. I have one. He was just, he painted, he quilted. He was a photographer. So he was one of these guys. But I'll never forget when I was, you know, probably, I don't know, in my teens, like 15 or 16. And I walked out to the garage or to the shop and he had there were parts everywhere, roll rows of bolts everywhere. And then another row of just like pieces of fenders and parts. I mean the whole floor. And this is a huge, huge building with a huge, I mean, you could fit a whole combine in there and he had torn apart this whole combine. And then I go, so do you, he goes, and then he was painting and polishing each piece and fixing, restoring it. And I said, I said, wow, that's a, I can't even imagine putting all this back together and, Um, do you, do you get some kind of a schematic or have like, uh, you know, uh, instructions on how to put it all together? Yeah. Uh, how do you, uh, and he goes, no. And he kind of looks at me, no. And I go, well, if you don't have any instructions, how do you know? I mean, there's hundreds, if not thousands of parts here. How do you know where everything goes? How do you know how to put it together? And he just looked at me like as crazy and goes, because I'm the one that took it apart. And he was serious. Like, that's how he did it. I just I don't know. I could never do that. So that's one of my favorite memories of my grandpa. And that encompasses exactly who he is, because I'm the one that put it. I'm looking at hundreds of pieces spread out across this floor. How do you know how it all goes back together? And he goes, well, because I was the one that took it apart. He wasn't making a joke. He looked at me like I was kind of stupid.

Boy, are you dumb, boy? I'm the one that took it apart. Of course I know how it goes together. Yeah, how he didn't have an iPhone there.

You know, it's like if I'm rewiring something, I'm like, take five pictures. This was before Google, YouTube, or iPhone. So people today would be out of luck.

Right?

Yeah, no doubt. So anyway, I didn't mean to get us off track, but back on the serious side, people can get themselves into trouble. You've probably had clients that want to take out $50,000 out of their retirement funds to help their kids, their grandkids buy a house or buy them a car or pay off their student loan. But it's like the airline analogy, you know, when they tell you if the oxygen mask drops, you've got to put your own on first before you help your children. And, uh, because if you don't put your own on first, you're not going to be, you might not be able to help your kids. Right.

Yeah. Unfortunately, we have seen some sadder stories where, um, you know, we had, we had a mom that was just spending and spending and spending, trying to help her, her grandson sort of realize his dreams. At one point, the guy was trying to buy a golf course and redesign it. Like he had really, the grandchild was like, had really big dreams and whatnot. You know, it's hard not to try and help him fulfill those dreams because if he threaded the needle and pulled it off, it would have been amazing. But, you know, it unfortunately ended up being a giant disaster and she just lost all the money. And, you know, and that's, you know, that's a problem. And then just regular giving to, you know, if you are a grandparent that is giving your grandchild a little bit of money here and there. It can lead to dependency. It can lead to guilt. In some circumstances, the grandchild has a bad habit that the grandparent doesn't know about, whether that be gambling or drugs or alcohol. So, yeah, you can create some problems. And then the other part of this is that, again, it comes back to the grandparent. What happens if the grandparent has some very unexpected health care costs? Or what if they have to go into long-term care and now they're spending $10,000 a month for them or for their spouse to get the care that they need? So, again, we've got to be really careful with our financial planning and make sure that, like you said, the oxygen mask is on firmly for the parent or grandparent in this case before they start helping those around them.

Yeah. Yeah. And that and that is important because we all it's human nature or it should be. We all want to help our kids. Right. And we all want to say, you know, I put put our children and our grandchildren, especially the grandkids. There's a special bond there. We want to do whatever we can to help them out. And the temptation is there to use our retirement funds. But if you're spending four thousand dollars a year or more on your grandkids or even five hundred one month, if you don't have it in the budget, you don't have it in the budget. Right. You've got to look at what you can do and what you should do and go from there. And again, it's time spent is the is the number one gift you can give your grandkids.

I like the idea of incentivizing the grandkids and trying to get good behavior out of them. So like encourage setting goals and actually getting earnings over just straight up handouts. So maybe you sit down with your grandchild and say, okay, what's a goal that you have? What's a toy or a game or something that you want to buy? Help teach them that art of setting a goal. Saving. saving for it and then give them a bunch of chores to do, and you can pay them obnoxiously more than they deserve. You can still be a generous grandparent, but just try and instill in them Let's work together on this. And I think it'll give the grandkids confidence and potentially lifelong money skills. So, you know, these kids that you had, they're probably not teaching them all this stuff. They're too busy running around to sports practices. So be that good influence on them, something that they'll never forget.

Yeah. I mean, I just, and then we get into the area of teaching kids financial responsibility, which I wish my parents and grandparents had done with me, honestly. You know, hindsight is always 20, 20, but I didn't get that. And the value of money and saving. And I think it should be taught in schools and at home and by grandparents, the grandkids. Yeah. Don't just give without, you know, that message. I don't, I think that's the best advice you've given on the show today, Ken. That's really good.

Well, and like you, I know you just mentioned you spoke at your grandpa's funeral. So I spoke at my grandpa's funeral too. When grandparents speak, grandkids normally listen. So my grandpa told me exactly what he wanted said at his funeral, how he wanted it to go. In his case, it was my dad's grandpa, so it was Grandpa Wink. And his nickname in the local city was Good Times Wink. Like he was... he's a happy guy. He was a happy guy. Uh, he got an inheritance. He, he, if he was having a couple high balls, he'd be sure to, to share the love with those around him. So he's a, that's how he wanted his funeral. He wanted it to be a celebration of life to, you know, everybody have a few drinks and tell a few good stories. And that's what we did. Um, But yeah, you know, it's good to prepare your kids and grandkids for an inheritance too. You know, let them know. Don't let it be a surprise. A lot of people are very, very private with their finances, but it's okay to let your kids or grandkids know like, hey, I've got some money and this is what I want you to do with it. I don't want you to spend it on a keg party or a convertible. I want you to, you know, build your first house or pay for your college or whatever. Whatever the case may be, whatever your values and intentions and dreams are, communicate that. Don't just let them read it in a will. You know, I think it'd be much more impactful if you talk to them about it in person.

Yep. I think that's great advice. And along with making sure you're communicating and working with a trusted financial services professional like you can and your team there at Summit, I think that's really important. Now, we've had a great show today. Before we go, is there anything else you want to add for our listeners out there?

So we've already mentioned the importance of a financial plan. So I want to overemphasize that one last time. And that if you work with a fiduciary who has financial planning software like we do here at Summit, we can budget for everything that you want to do and just make sure that you're still going to keep everything just the way that you want it in your later years. But the last thing is just don't compete with other grandparents anymore. don't keep up with the Joneses when it comes to who's the best grandparent. The love of your grandkids is not a contest. Just focus on being present, spending time with them so that it's about presence, not presence, you know, being there, not about gifts. Your relationship is way more meaningful than, than any kind of a gift or cutting a check.

Yeah, exactly. So before we go, how can our listeners out there set up a meeting with you and your team at Summit to get that plan in place or get a second opinion on where they're at? Make sure that all their ducks in a row are there so they don't have to worry about money in retirement or what they can spend on their grandkids.

Right, yeah, almost everyone has investments, and considering the market hit new all-time highs last week, most people are happy with those investments, but not everyone works with a fiduciary who can put a comprehensive financial plan together for them. So you can visit our website, www.summitfc.net, or you can give us a call at 586-226-2100. We'd be happy to give you a second opinion, give everything a once-over, and let you know if your money will go the distance.

All right. Thanks, Ken. Listeners, that does it for today's episode of Money Talks with Summit Financial Consulting and our host, Ken Wink. Thank you for joining us for Money Talks. Don't head into retirement without a strategy that addresses both income and taxes. For more information, please contact Ken Wink at Summit Financial, working with people you trust. Call 586-226-2100 or visit summitfc.net. Join us again soon for another episode of Money Talks.