Most grandparents say they don’t plan to leave their children and grandchildren an inheritance, but would prefer to give smaller monetary gifts throughout their lifetime. Some 78 percent of grandparents regularly give small sums of money to their grandchildren, while only 22 percent plan to leave heirs a significant legacy, a new survey found.
The median amount of assistance provided over the past 5 years was $3,000, according to a Harris Interactive and MetLife Mature Market Institute online survey of 1,077 adults age 45 and older who have grandchildren age 25 or younger. Generally these financial gifts are under $1000 (39 percent) or between $1,000 and $5,000 (31 percent). Most of the grandparents said they have not increased or decreased their contributions to grandchildren since the recession began.
Cash is the favored method for helping out grandchildren (83 percent), but some grandparents also provided specific purchases such as a car, furniture, or a computer (33 percent). Less common gifts are savings bonds (17 percent), stocks or bonds (8 percent), and life insurance proceeds (5 percent). Most of the grandparents provided general financial support not earmarked for any specific purpose (40 percent). Just over a quarter of the survey respondents are helping to pay for their grandchildren’s education, typically by contributing to a college fund. Some grandparents also said they were contributing some money to expenses for preschool, elementary, middle, and high school expenses, or even helping college graduates to repay student loan debts.
Predictably, grandparents who are still working generally provide more financial assistance than retirees. But, interestingly, more part-time workers (60 percent) give gifts of money to their grandchildren than full-time workers (49 percent). And even among retirees, 31 percent provide financial support.
Yet, these gifts of money often don’t come with financial advice. About 68 percent of grandparents say they don’t offer their grandchildren any guidance about personal finances. The grandparents that did pass along their financial wisdom told their grandchildren to start saving and investing early in life (85 percent), to avoid debt (75 percent), to seek out financial security by obtaining health and life insurance (45 percent), and to avoid putting all their financial eggs in one basket (43 percent).
Tell us, do you give financial gifts to your grandchildren?