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September 14, 2011

Grandparents need to balance gifts and goals

Grandparents Day fell on Sept. 11 this year.

While not as widely observed as Mother's Day or Father's Day, Grandparents Day nonetheless serves a valuable purpose in reminding us of the importance of grandparents in the lives of their grandchildren. If you're a grandparent yourself, you already know the joy your grandchildren bring you, and through the years, you have probably been generous with them in many ways. At the same time, though, you probably need to strike a balance between your heartfelt gifts and your financial goals.

It can be challenging to achieve that balance. For one thing, you and your fellow grandparents have not been stingy in your giving over the past several years. America's grandparents provided an estimated $370 billion in financial support to their grandchildren between 2004 and 2009, according to a survey by the MetLife Mature Market Institute. This averages out to $8,661 per grandparent household over that same period.

However, many of these same grandparents may not be accumulating sufficient financial resources to enjoy the retirement lifestyle they've envisioned. In fact, the median balance of retirement accounts for 55- to 64-year-olds is only about $100,000, according to the Center for Retirement Research. That's not a lot of money for an age group that could spend two or even three decades in retirement.

So, as a grandparent, what steps might you take to bolster your retirement savings while simultaneously helping your grandchildren? Here are a few ideas:

ÔÇ° Maintain permanent life insurance. Once your children are grown, you may feel less compelled to carry life insurance. But the right type of life insurance can benefit you throughout your life. Permanent life insurance offers you the chance to build cash value, which you may be able to access, depending upon the specifics of your policy. And you can name your grandchildren as beneficiaries of your policy.

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