GRAND Magazine - Fall 2023 - 23

money
You can't help your kids if...
W
BY CYRUS E. BAMJI
hen my parents retired in the U.S. over 20 years
ago, most of their contemporaries relied on a
three-legged stool for income: personal savings,
pensions, and Social Security. My mother and father had
never worked in the States, so they were ineligible for most
of those options. Yet they still enjoyed a comfortable retirement
thanks to saving and investing well.
Grandparents are overspending on
their kids, but can they afford it?
Today, that three-legged stool collapsed. Pensions -
which provided lifetime income - have basically disappeared,
and many don't realize that Social Security only
covers about 40% of what's made while working. The
bottom line? The burden of having enough retirement
income has shifted to us.
According to the 2023 Protected Retirement Income and
Planning Study (PRIP), Americans need to prepare financially
for retirement. 51% of Americans between 45 and 75 feel
they don't have enough savings to last their lifetime, and
32% aren't confident they'll be able to cover basic monthly
expenses. This is magnified by Peak 65, a historic demographic
event in 2024 when the most significant number of
Americans in history will turn 65.
The cost of putting kids' needs first
In a chat with Emily and Mike Morgan on The Grand Life ,
23 GRAND FALL 2023
we discussed how grandparents often forsake their financial
security to help their adult children and grandchildren, with
an annual cost of around 179 billion dollars. According to
AARP, 53% of grandparents pay for education, 37% contribute
to living expenses, and almost a quarter cover medical
bills. Research by a 2023 Bankrate report reveals that 51%
of parents sacrifice their emergency savings. However, the
scariest finding is that parents just ten or fewer years away
from retirement contribute the most to their children.
Tamara Ince, founder of Ince Counseling and Consulting,
explains, " It's a perfect storm. Many grandparents are in that
legacy period where they want to feel more connected and
charitable. They feel some responsibility for the generations
that follow them but may not have set boundaries. And
that's why, in some cases, they aren't always concerned with
their survival. "
Quick tips to help you and your kids
The good news is that there are ways to secure your
retirement first and then help support loved ones:
1. Work with a financial advisor to create an income vs.
spending plan that considers your essential and discretionary
expenses.
2. To fill the gap that Social Security leaves, ensure you
have enough protected, guaranteed income, such as an
annuity, to cover your basics.
3. Be transparent about your retirement finances and
limits with your children and grandchildren.
4. Give money as a loan
with a repayment plan and put parameters in
place if you plan to support adult children financially.
The PRIP study finds that Americans and financial advisors
are more focused today on having enough protected
income to support what could be decades in retirement.
Like my parents, protect your retirement income and be disciplined
with your money to help prioritize where and what
you can spend.
Cyrus E. Bamji, chief strategy and communications
officer with Alliance for Lifetime
Income, has spent over 20 years leading
large-scale growth and transformation
strategies for financial services, healthcare,
and technology organizations. He leads
financial education strategies focused on
consumers and financial advisors.

https://www.facebook.com/GRANDmagazine https://www.aarp.org/research/topics/life/info-2019/aarp-grandparenting-study.html https://www.bankrate.com/personal-finance/financial-independence-survey/ https://www.protectedincome.org/2024-surge-of-retirement-age-americans-peak-65/ https://www.protectedincome.org/about-us/ https://omny.fm/shows/thegrandlife/save-it-for-later

GRAND Magazine - Fall 2023

Table of Contents for the Digital Edition of GRAND Magazine - Fall 2023