These are supposed to be your twilight years. You’ve worked hard, scrimped and saved to build a small nest egg and you’re carefully managing your Social Security. Then something happens and you’ve taken in your grandchildren.
Let that sink in for just a moment. You’re emotionally and physically ready to retire, or have retired, and now you’re raising children… Again. Some of you may be financially set but chances are good many of you are just getting by.
According to AARP, over 3 million grandparents are raising grandchildren as of 2018. A similar report conducted by PBS found that 20% of these grandparents’ income falls below the poverty line.
It’s admirable and perhaps there’s no other choice, but it does come at an extraordinary cost. So, what do you do when you may not be able to afford it? Raising children on a limited or fixed income is challenging so here are some ideas on what you can do if you find yourself in a full nest once more.
Let’s start by acknowledging how important it is to take care of yourself. You now have young people depending on you as you’re approaching your golden years. Although your mind and body will now require a little more self care, it is nothing unachievable! Be sure to eat right, get regular exercise, stay up to date with doctor visits and look for support groups that understand what you’re going through. Take care of your marriage by spending alone time with your spouse and getting those date nights scheduled.
Now on to the financial advice:
- Work a little longer. If you’re still working, continue to do so as long as it’s feasible. The income and benefits you receive will help offset the additional expense of raising your grandchildren. If you have medical benefits, your insurance is most likely much cheaper than you’ll pay when you retire.
- Postpone taking Social Security. Hold off taking your Social Security until age 70. Holding off from age 66 to 70 will increase your benefit by about 25%-32%.
- Adjust your life within your means. Try to accommodate your children in the space you have, with the cars you own and within your existing working schedule (if you’re working).
- Apply for financial aid, medical and food benefits through federal and state programs.
- TANF – Temporary Assistance for Needy Families. This government program provides cash assistance to families in need. Each state has their own guidelines and is managed through the Department of Human Services.
- SNAP – Supplemental Nutritional Assistance Program, otherwise known as food stamps.
- Medical assistance – Medicaid and CHIP are medical programs to insure children have medical coverage.
- Site with links to federal programs to help grandparents: https://www.usa.gov/child-care#item-36982
- Manage the money you do have VERY carefully.
- If you have a budget, you may need to rethink your spending to allow for more food and clothing expenses. You’ll want to cut down in other areas to avoid budget creep. If you don’t already have one, this is a wonderful opportunity to learn how to budget!
- Be prepared to set expectations for yourself, your spouse and your grandchildren about the realities of the situation. If you’re on a limited budget, it’s ok to let children know that they won’t be getting everything they may want.
- Don’t be tempted to keep up with other families who are in different situations. Your grandchildren will probably be with kids whose parents are both working and in their prime earning years. Those families may have more disposable income and likely be more willing to spend on things kids want. Your grandchildren may have to pass on certain extracurricular activities and that is okay. Try your hardest to not let yourself be guilted into spending to keep up with others.
- Don’t tap retirement funds. Don’t be tempted to tap your retirement funds for education or other child related expenses. Don’t jeopardize your retirement for any reason. If there’s a tough choice, always fund your retirement first.
- Ask family and friends for help. Don’t be embarrassed to ask family and friends for help! Family members might be able to help financially, or provide help with babysitting, errands, homework or anything else that could be helpful.
A new law, the Supporting Grandparents Raising Grandchildren Act, was passed in 2018 that is intended to help grandparents raising grandchildren. This Act establishes an advisory committee that will identify, promote, coordinate and disseminate information about resources and best practices to help relative caregivers meet the health, educational, nutritional and other needs of the children in their care as well as maintain their own physical and mental health and emotional well-being. Be on the lookout for news and information from this council.
You’ve taken on a huge responsibility, one that is very noble. I have no doubt that you can do it. You may face some financial challenges but with a little careful planning and thoughtful spending, you will find yourself more than able to provide the care your grandchildren need. I also expect that you’ll find a huge silver lining in this unexpected situation: a renewed sense of purpose and the special joy that raising children can bring!
Damian is the lead Financial Concierge on Your Money Line, the financial help line serving all Pete the Planner® Financial Wellness clients. Damian is a CERTIFIED FINANCIAL PLANNER™ professional and loves answering your money questions. Despite sharing a last name and sense of humor, Damian and Pete are not related.