Rising living costs force Canadian grandparents to support both their adult children and grandchildren
Canadian grandparents are experiencing a financial strain due to the rising cost of living, which affects both their own finances and the support they provide to their adult children and grandchildren.
The 2024 RBC Family Finances Poll – Grandparents Edition highlights the extent of this issue.
The poll, which surveyed grandparents aged 55 and older, found that 21 percent are supporting at least one adult child aged 25 and older, and 30 percent have provided money to their grandchildren. This financial support comes at a significant cost.
Among the surveyed grandparents currently providing financial support to their adult children or gifting money to their grandchildren:
- 54 percent are sacrificing their own savings
- 52 percent have made or would need to make significant lifestyle changes to continue providing assistance
- 33 percent are worried about running out of money to maintain support and cover their own costs
- Only 37 percent have reviewed their finances to see what they can afford to provide
- Only 20 percent have considered how their support could impact their retirement plans
The poll findings indicate that many grandparents are feeling increased pressure to provide financial support. Seventy percent reported that their adult children expect them to help cover necessary costs such as food and clothing, and 54 percent are providing this money at least monthly.
For grandchildren, support for everyday living costs (30 percent) is second only to education expenses (39 percent).
Craig Bannon, director of the Financial Planning Centre of Expertise at RBC, explains, “While it's not unusual for grandparents to provide financial assistance to younger generations, the dramatic difference today is this support has become a necessity, rather than simply a desire to help.”
“This can be a financial drain that grandparents haven't included in their budget. The closer they get to retirement, the bigger the impact unplanned costs such as these can have on their retirement savings. And for those who are already retired and living on a fixed income, these added expenses can pose an immediate risk,” he continued.
Another concern is that many grandparents do not know how much money they have provided to their adult children (43 percent) or grandchildren (34 percent).
Bannon advises, “If you're covering essentials for younger family members on an 'as needed' basis, it can be challenging to keep on top of these amounts and how they are affecting your cash flow and savings.”
“Regardless of how much or how often you're providing this support, we can help you try to find a comfortable balance between what you want to provide and what you can afford to spend, so you can also meet your own needs, today and in the future.”
To help grandparents maintain their finances while supporting their adult children and grandchildren, Bannon shares three tips:
- Have open conversations with your adult children early and often to ensure expectations are clearly understood and that financial support doesn't overstrain your resources.
- Connect with a financial advisor who can help you build a plan that includes how much money you expect to provide and see how that matches your current cash flow. Regularly check your plan to stay on track.
- Look beyond today, especially as you get closer to retirement. Understand how any financial support you provide now may affect your savings and your ability to cover your future costs.
