When many people hear the word “parents,” they picture a couple in their forties… not a couple in their seventies. The reality is that 6% of kids today live in households headed up by grandparents – a parenting situation that may lead to significant financial stress.1
How can grandparents protect their retirement savings? This should be a high priority, even if the children are old enough to work and earn some income for the household. Grandfamilies are frequently pressured to take on new and large debts. Dipping into your retirement savings or refinancing to pay for education costs, a new vehicle, chronic health care treatments, simply the cost of living – this should be avoided if at all possible, and with a little exploration, ways to lessen the monetary pinch may be found.
Grandparents should feel no shame about asking for help. If the financial burden is too much, then it is time to explore means of assistance.
The cost of rearing a child can be high, especially if one or both grandparents work and daycare is needed. A pre-retiree may end up quitting a job (losing household income and retirement savings potential) to care for children full-time.
Can state or local agencies pick up some of the tab for child care? That may be a possibility. Free or subsidized child care services are available in many metro areas for grandfamilies in need (you may want to check out childcareaware.org for some resource links).
Most states have subsidized guardianship programs offering assistance to grandparents providing a permanent home for grandchildren; the American Bar Association (abanet.org) has information on such resources. Grandfamilies may be eligible for the federal Temporary Assistance for Needy Families (TANF) program, which may provide benefits in cash (typically around $150 per month, but every dollar helps), paid child care, Medicaid, money for clothes and more, depending on the state of residence. Even in higher-earning households, a grandparent can still apply for a child-only TANF grant, which takes just the child’s income into account (some minor children do receive Social Security income).1,2
Is there any way to lessen legal fees? LawHelp.org is a worthwhile national link to low-cost or even free sources of legal aid services. (Some custody situations may require only paperwork that can be reviewed by a lawyer at minor expense.)2
Social Security might be able to help. If a grandchild has at least one parent who has died, become disabled, or retired, then that grandchild may be eligible for Social Security benefits. He or she may also be eligible if a caregiving grandparent retires, dies, or is rendered disabled.2
Medicaid coverage for a grandchild may be possibility. A caregiver (read: grandparent) can apply for it on a child’s behalf if the child resides with a non-parent family member. See cms.gov for more.2
What if you can’t afford private health insurance but make too much for Medicaid? Visit insurekidsnow.org, the website of the federal Children’s Health Insurance Program, or CHIP. CHIP can provide relatively inexpensive coverage for basics like immunizations and scheduled doctor checkups, even X-rays and some forms of hospital care.2
In addition, some states have funds in place to aid grandfamilies. Churches, temples, and local non-profit community groups can also prove good resources.
Ideally, guardians should be named in a will. This basic and very important estate planning matter may be addressed in two ways.
If grandparents have legally adopted a child, then they can name a legal guardian for the child should they die before the child turns 18. What if no legal adoption has occurred and the grandparents are merely legal guardians themselves? In that instance, the grandparents have no ability to name a successive legal guardian. The parents would again assume legal custody of the children in the event of their deaths. Should both parents also be deceased, a guardianship decision will be made in court. Grandparents who are not legal parents can still express their guardianship wishes in a will, and a court should value that opinion if those grandparents pass away.2
While there are certain joys to parenting, there are also undeniable stresses. Grandparents who must now parent minor children should know that they are not alone (in fact, the number of grandfamilies in America has doubled since 1970), and that they can explore resources to find help.1
Chris Perme may be reached at 330-527-9301 or firstname.lastname@example.org www.permefinancialgroup.com.
Christopher Perme is a registered representative of and offers securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC. (www.SIPC.org) Supervisory Office: 2012 West 25th Street, Suite 900 Cleveland, OH 44113. 216-621-5680. Perme Financial Group is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies.
1 – cbsnews.com/news/raising-grandkids-and-going-broke/ [10/29/14]
2 – hffo.cuna.org/331/article/3944/html [1/12/15]