Financial Gerontology: Boomer Grandparents
The two extremes of boomer grandparenting — spending unprecedented amounts of discretionary income on treats for the grandkids and actually supporting grandchildren — both have important implications for the finances of today’s grandparents.
In the Financial Gerontology column that appears the May 2006 edition of the Journal of Financial Service Professionals, Sandra Timmerman, EdD, discusses some of the critical financial issues boomer grandparents may face in their new role. The column, entitled “Boomers as Grandparents: Building a Secure Future for Both Generations,” recommends that grandparents seek a healthy balance between giving toys and treats now, setting aside money for the grandkids’ financial future, and ensuring that their own retirement is funded.
In her overview of the boomer grandparent, Timmerman addresses demographics (by 2007, about 32 million boomers will be grandparents), discretionary income, and the 2.4 million grandparents who support the basic needs of grandchildren who live with them. She also discusses the special relationship that the two generations have historically shared, noting that there may be a natural alliance between these groups who are not in the economic mainstream.
According to Timmerman, becoming a grandparent is a life event that often spurs a reassessment of financial needs as individuals seek to help their progeny without jeopardizing their own financial security. Reviewing life insurance and estate planning at this time also makes sense, she notes.
Grandparents also can play a role in helping youngsters learn financial basics like saving and budgeting. And their role in educating grandchildren can be extended to establishing college savings accounts. These accounts not only help to assure funding for higher education, but free up the adult children to save for their own retirement or have more money for day-to-day expenses.
Sandra Timmermann, EdD, is the director of the Mature Market Institute, a business unit of MetLife. The Institute is the company’s information and policy resource center on issues related to aging, retirement, and long-term care. Staffed by gerontologists, it provides training and education, consultation, research, and resources and information to support MetLife, its corporate customers, and its business partners. Dr. Timmermann received her master’s and EdD in educational gerontology from Teachers College, Columbia University.