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Money and advice from Grandpa

By Jennie L. Phipps · Bankrate.com
Sunday, September 19, 2010
Posted: 10 am ET

About two-thirds of America's grandparents have give financial support to their grandchildren in the last five years -- 40 percent for general uses and 26 percent for education, says recent research from the MetLife Mature Market Institute.

The poll found that the less money people have, the more likely that they are going to be spending a higher percentage of it helping their children and grandchildren. More than 20 percent of the grandparents surveyed said their generosity was having a negative impact on their own retirement security.

But the majority -- 78 percent -- say it's more important to distribute smaller gifts throughout their lifetimes as needed, rather than leaving a larger sum of money as a legacy at death. Factoring this into retirement planning is a worthy endeavor for many families.

A grandparent's generosity can make a big difference. My oldest son was born shortly before his great-grandfather died and left him a significant amount of money that we invested for him. It ultimately helped him graduate from Princeton University with almost no debt, a gift that has changed his life.

As a parent, I deeply appreciated this gift and the fact that it came without strings. We invested it in ways that we thought made the most sense. When it came time for my son to choose a school, he had the freedom to pick the one that suited him best.

It also was  a good thing that my son's great-grandfather was savvy enough to leave the money in a way that allowed us some control and ultimately, sheltered a lot of it from college financial aid calculations. Getting expert help when you set up these kinds of gifts can make a big difference down the road.

My only wish is that my son's great-grandfather had lived long enough that he could have personally provided my son some of his wisdom and seen what a fine man his grandson has grown to be.

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