Grandparents are increasingly likely to be caring for their grandchildren. According to the 2010 U.S. Census, 2.7 million grandparents live with their grandchildren and pay the bills that cover their basic needs. That's up 13 percent from 2000.
Even if your grandchildren don't live with you, it is likely that you'll be helping them out financially. Some 62 percent of U.S. grandparents gave their grandchildren money over the last five years -- either as a gift or they paid bills for their necessities -- according to research from the MetLife Mature Market Institute. On average, MetLife says grandparents spent $8,289 on their grandchildren over the last five years.
High-income grandparents were even more generous, giving an average over the last five years of $23,068 toward long-term savings and investments, $8,276 for education and $6,742 for a down payment on a grandchild’s home.
Some 43 percent of grandparents reported that they were helping out in the face of the economic downturn, with 34 percent admitting that helping grandchildren reduced their own financial security.
Sandra Timmermann, gerontologist and executive director of the MetLife Mature Market Institute, says grandparents need to understand how much money they can safely give. "It could come back to bite them if they run out of money and have to rely on family themselves," she said.
But Timmermann, who is a grandmother of four, admits that she doesn't bother to add up what she pays for airline tickets so her grandchildren can visit. Nor is she keeping track of what it costs her to pick up the tab for the big family vacations that she enjoys so much. It's typical for grandparents to spend money now on their grandchildren rather than saving it to leave as an inheritance, she says, with 81 percent of grandparents telling MetLife that's how they are approaching estate planning.