Advice for Grandparents Raising Grandchildren
many people who have already raised their children, becoming a
grandparent is a welcomed new era.
However, many grandparents who are approaching or are
already in retirement are suddenly finding themselves reliving
parenting and the associated financial challenges.
This time, however, they are responsible for raising their
to the 2000 Census, 6.3% of all children under 18 in the United
States (4.5 million children) are growing up in households headed
by grandparents. About
one-third of these children do not have either parent present in
the home. These
grandparents are again faced with childrearing, as well as all of
the accompanying financial obligations.
Financial Issues Grandparents Face
grandparents in this situation may have court and custody fees to
consider. Legal custody is essential to enroll the child in
school, have access to school records or obtain medical care. If
there is a struggle between the grandparent and the parent, court
fees could reach tens of thousands of dollars. Grandparents also
may find themselves financially responsible for the parent, who
may suffer from mental illness or substance abuse and is unable to
care for him or herself.
addition, clothing, food, daycare, healthcare and education costs
for the grandchild may put an immediate strain on grandparentsí
finances, especially if Grandma and Grandpa are retired and living
on a fixed income. With
so many financial considerations, short and long-term planning are
essential to ensure that grandparents can make the appropriate
adjustments and keep their finances on track.
Tips for Grandparents Raising Grandchildren
your financial goals for your grandchild.
What kind of lifestyle do you want him or her to have?
What can you afford? Will
you pay for college? When
old enough, will he or she work part-time to help provide
financial support? These
are all hard but crucial questions you must ask yourself before
developing your financial plan to care for your grandchild.
financial assistance. Because
it is often difficult to afford the costs associated with raising
a grandchild, some states offer subsidies for grandparent
are available under the Temporary Assistance to Needy Families (TANF)
program, which offers financial help to families with a low
income. To see if you
are eligible, contact your local Social Security Administration
Office. If you are
retired and do not qualify for government assistance, you may have
to consider going back to work to cover the new expenses.
health insurance for the grandchild.
Be sure to research all of your insurance provider options,
including private insurance, Medicaid or state Childrenís Health
Insurance Programs (CHIP). Contact your insurance carrier to see
if your grandchild is covered as a dependent on your policy refer
to your local Department of Social Services or Child and Family
Services office for Medicaid/CHIP information, or contact your
local or state Public Health Office for information about low-cost
or free programs.
Take advantage of tax breaks.
The IRS offers some help with daycare bills and other
childcare costs via tax breaks. The federal income-tax credit for
daycare expenses permits you to deduct about 20% to 30% of
childcare expenses (within limits), which translates to $500 to
$1,500 per year, depending on your income. Some states also offer
additional tax breaks for childcare costs, so check with your tax
or financial advisor for details.
advice and support from grandparents in similar situations.
Numerous organizations offer assistance and information on
health, insurance, legal, financial and educational issues
relevant to grandparents raising grandchildren. The American Association of Retired Persons (AARP) maintains
a national database of support groups at www.aarp.org
your life insurance policy. Now
that you are caring for a dependent again, you should make sure
that your grandchild will be adequately cared for if you become
disabled or pass away. Review
your current life insurance policy and confirm that it will
accommodate your grandchild.
Examine and adjust your will. Be
sure that your will designates a guardian for your grandchild in
the event that you and your spouse die. Your will also can
be a vehicle for creating a trust to hold your grandchild's
inheritance. The trust allows you to specify what you want the
money to be used for (such as college education costs) and at what
age you want the principal distributed to your grandchild. That
way, you can delay distributing money to your child until he or
she is old enough to handle it responsibly.
or develop your financial plan.
It is usually unplanned that grandparents find themselves
caring for their grandchildren, so adjustments should be made to
your overall financial plan as soon as possible.
If you donít have a plan in place, now is the time to
meet with a qualified financial advisor who can guide you through
the new financial issues you are about to face.
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This information is provided for informational purposes
only. The information
is intended to be generic in nature and should not be applied or
relied upon in any particular situation without the advice of your
tax, legal and/or your financial advisor.
The views expressed may not be suitable for every
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Advisors Inc. Member NASD. American Express Company
is separate from American Express Financial Advisors Inc. and is
not a broker-dealer.
This communication is published in the United States for residents of
North and South Carolina only; and this advisor is licensed only in
the states of North and South Carolina."
Roy P. Janse
Financial Advisors, Inc.
IDS Life Insurance Company
1150 Haywood Road
Greenville, SC 29615
Phone: (800) 554-0805 x141
Fax: (864) 234-7139