The Altruistic Act of Grandparents
According to the Financial Post, many Canadian grandparents are risking their own financial future to support their adult children and grandchildren. According to a recent study by the Royal Bank of Canada, 21% of grandparents are currently supporting at least one adult child, and 30% have provided financial assistance to their grandchildren.
The Extent of Financial Support
The study reveals that more than half of grandparents are sacrificing their own savings to provide this assistance, and 52% have made or would need to make significant lifestyle changes to continue doing so. One-third even fear they will run out of money if they have to keep up the support and cover their own costs.
The Importance of Planning
Only 37% of grandparents have reviewed their finances to see what they could currently afford to provide, and just 20% have considered how it could impact their retirement plans. This lack of planning can have severe consequences, especially for those nearing retirement.
The Impact on Retirement
“The closer they get to retirement, the bigger the impact unplanned costs such as these can have on their retirement savings,” says Craig Bannon, director of RBC’s financial planning centre of expertise. “And for those who are already retired and living on a fixed income, these added expenses can pose an immediate risk.”
The Reason Behind the Support
Most grandparents seem to be providing financial support out of necessity, with 70% saying that their adult children expect them to help cover necessary costs such as food and clothing.
The Need for Open Communication
Bannon recommends grandparents have open conversations with their adult children early and often to set clear expectations and to look beyond today to understand how the financial support they provide may affect their own future.
Supporting Your Financial Future with Cruz Financial Group
At Cruz Financial Group, we understand the importance of financial planning and stability. Our team of experts is dedicated to helping individuals and families achieve their financial goals. If you’re a grandparent seeking to support your loved ones while ensuring your own financial security, we’re here to help. Our mortgage services can provide you with the financial flexibility you need to achieve your goals. Contact us today to learn more about how we can support you.
