As we begin our exit of the Great Recession we have all had to make sacrifices to get by. Whether it be cutting back on vacations or shopping a bit more frugally for food, tightening our belt has become the norm. In many cases, retirement savings have become a last resort to keep us liquid and though we hate to dip into those sacred accounts, sometimes there has been no other way. But at what price? Using our limited resources to keep afloat today may result in us experiencing first hand that number one retirement fear of outliving our savings.
I read an article in the Mercury News this morning about the plight of grandparents who are forced to help their children through tough times due to the economy and lost jobs and stretched mortgages. Retirement for many can unexpectedly become a continuation of raising the family that you thought you already raised. Providing daycare services for grandchildren can help children make ends meet but is that really what we want to be doing in our golden years? According to the Mercury over the past five years grandparents have provided $370 billion in financial support to their grandchildren, an average of $8661 per household. And this is at a time when many retirees have total savings accounts in the area of $100,000.
Is it fair or wise to attempt to keep afloat the families of today at the expense of the retirees of tomorrow? Or is this just a way of deferring our debt? Someone is ultimately going to have to pick up the tab.
As retirees living on a fixed income, grandparents need to realistically look at their situation and make hard choices.You can no longer add to your savings – you have to live on what you have. You want to help but how much?
- What can you realistically afford to contribute to your kids and grand kids without putting yourself in future financial jeopardy? You need to carefully consider the whole picture weighing your income and costs for the next “x” number of years and only contribute what you can afford if you hope to assure your future financial security. Overly generous behavior now is a recipe for disaster later.
- If money is “loaned” to children can you count on getting the money back at some future time? Will you be okay if you do not get reimbursed? And is the potential friction that this debt may cause in the best interest of all concerned?
- You can choose to volunteer your time to help with daycare but is that what you really want to be doing with your retirement? For many it is and for others it is a worthwhile sacrifice since you get to spend time with the little gremlins before they enter the evil teenage years! But if you do not want to do this or are willing to help out but for the short term, how do you get your message across? Remember this is your life to live so what do you want to do?
- If you choose to take care of your children family today can you expect your children to take care of you later? Do you even want to be in that difficult position?
- Can your children reduce their standard of living to better cope with their needs? Everyone has to live within their means and if times are tough you have to learn to do with less.
Sometimes saying no is the best answer for all concerned not only for today but for the future.
We all want to help wherever we can especially when it concerns family. But as retirees we need to realistically look at all of the variables. The decision is a very personal one and what works for me may not be the ticket for you. But be ware – this is not something we can afford to make a mistake regarding. A sound decision today will hopefully lead to a safer and more secure tomorrow.