Retirement
Fund vs. College Fund -- Do Grandparents Raising Grandkids
Have to Forfeit Retirement?
Visions
of retirement don’t typically include attending parent-teacher
conferences and helping with nightly homework. Yet
for more and more seniors, that is the reality. Over
the past 10 years, the number of children being raised
in grandparent-headed households has increased by
30 percent.
Being thrust into the role raises many tough issues
for grandparents. First and foremost, how will they
afford retirement while handling the added expense
that comes with raising a family? Providing food,
shelter and clothing for kids is expensive, and the
average income for grandparent-headed households is
usually under $20,000.
Financial expert Chris Farrell, host of Twin Cities
Public Television’s “Right on the Money!” urges grandparents
to think of themselves first. "You can't help your
grandkids unless you've taken care of yourself," he
says. "While your inclination is to put the child’s
needs ahead of your own, you actually are serving
them better by looking out for yourself first." With
that in mind, Farrell offers five practical suggestions
for grandparents who face this situation.
1. Don’t Sacrifice Your Retirement
“When
money is tight, many grandparents wonder how they’ll
live in retirement and pay for their grandchild’s
expenses,” says Farrell. “Funding a secure retirement
should be seniors’ first priority.” Farrell cautions
seniors against borrowing money from their 401(k)
plans. While it might be tempting to dip into money
previously earmarked for retirement, it’s not a good
idea – and could be trouble in the long run. Grandparents
should not stop saving for retirement under any circumstances,
especially if they’re relatively young in age.
Still others imagine they should forsake funding their
retirement, and be putting money into a college fund
for their grandchildren. But this isn’t the best use
of their money either. “The child can borrow to go
to college,” says Farrell. “The grandchild will have
more time to pay back the student loan as opposed
to a grandparent who faces a more limited time frame.
2. Know Your Resources
Resource savvy Grandparents will look to see if they
qualify for the TANF program. – (TANF stands for Temporary
Assistance to Needy Families.) TANF is a state-run
program that offers financial help to families with
a low income. Know going in that rules affecting grandparents
and their grandchildren vary from state to state so
you’ll have to contact the department of social or
human services in your county or state to find out
more.
1 | 2
-
