Some things never change
During in-depth interviews,* most grandparents age 50+ surveyed by AARP said being a grandparent was a "joy." Many mentioned that grandparenting is like parenting, only better since they don't have to take primary responsibility for providing care — or discipline. Citing the benefit of age and maturity, survey participants said they're better able to appreciate their grandchildren.
That's not to say the grandparents surveyed are only in it for the good times. Many said they feel a responsibility to help shape their grandchildren's lives by counseling them, passing on values, providing moral guidance and establishing intergenerational family ties.
Spending and spoiling
Has the recent recession put a damper on how much money today's grandparents are spending on their grandchildren? More than half of those surveyed said the recession didn't change anything. However, a similar number said they've made financial cuts in other areas so they can afford to keep spending on their grandkids.
Gifts that keep on giving
Instead of showering grandkids with more and more presents, some grandparents are giving gifts that make a difference, such as money for college or contributions to a savings (or investment) account. For older grandchildren who have earned income, funding a Roth individual retirement arrangement (IRA) is another gift that can provide long-term benefits. A Roth IRA's potential for tax-deferred earnings and eventual tax-free distributions** can be very attractive.
A life insurance policy is another gift with lifelong benefits. If you have grandchildren, talk to your financial professional about how you can spoil them — in a financially sound way.
* Insights and Spending Habits of Modern Grandparents, AARP, 2012
** Certain tax law requirements must be met.
FINRA Reference #FR2012-1030-0152/E 02/04/13
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