Canadian grandparents are doing double duty when it comes to providing financial support, and a new report says that most are sacrificing their savings for it.
The Royal Bank of Canada released its 2024 RBC Family Finances Poll — Grandparents Edition, and its findings are bleak.
The soaring cost of living has caught many grandmas and grandpas in a money squeeze as they juggle their own finances with the financial support they’re providing to two generations — their adult children and their grandchildren.
According to the report, which surveyed 1,508 Canadian grandparents aged 55 and over with adult children aged 25+, 21% currently support at least one adult child, and 30% have gifted money to their grandchildren.
This financial assistance is coming at a high cost, RBC found.
Among the grandparents surveyed who are currently financially supporting their adult child(ren) and, or have gifted money to their grandchild(ren), 54% are sacrificing their own savings to provide assistance.
RBC
It seems that grandparents feel pressure to provide this financial support, with seven in 10 (70%) reporting that their adult children expect them to cover necessary costs like food and clothing. A majority (54%) are giving this money at least monthly.
According to the report, the average financial support given yearly to adult children among grandparents keeping track is $6,495.
“While it’s not unusual for grandparents to provide financial assistance to younger generations, the dramatic difference today is this support has become a necessity rather than simply a desire to help,” said Craig Bannon, director of the Financial Planning Centre of Expertise at RBC.
The necessity of providing this support has one-third of grandparents worried that they’ll run out of money or savings to maintain it and cover their own costs.
“This can be a financial drain that grandparents haven’t included in their budget,” added Bannon.
“The closer they get to retirement, the bigger the impact unplanned costs such as these can have on their retirement savings. And for those who are already retired and living on a fixed income, these added expenses can pose an immediate risk.”
RBC
It doesn’t help that only 37% of those surveyed have reviewed their finances to see what they could afford to support, and only 20% have considered how their support could impact their retirement plans.
RBC also finds it concerning the number of grandparents who admitted they don’t know how much money they have provided to their adult children (43%) or grandchildren (34%).
“If you’re covering essentials for younger family members on an ‘as needed’ basis, it can be challenging to keep on top of these amounts and how they are affecting your cash flow and savings,” explained Bannon.
If you’re a grandparent struggling to keep both your and your adult children’s finances healthy, Bannon shared three tips:
- Have open conversations with your adult children early and often. This will ensure expectations are clearly understood and existing or upcoming financial support doesn’t overstrain your own resources.
- Connect with a financial advisor who can help you build a plan that includes how much money you expect to provide and see how that matches your current cash flow. Once that’s set up, check your plan regularly to stay on track.
- Look beyond today, especially as you approach retirement. It’s important to understand how any financial support you provide now may affect your savings and your ability to cover your own future costs.
Are you a grandparent who can relate to the struggles in this report? Share your experience with us at [email protected] for a possible future story. Confidentiality can be accommodated.