Life with grandchildren means getting to spend your later years doting on your favorite little ones. For some, it also means a new chapter of raising a family in a “second parenthood.” In fact, across the U.S., 2.7 million people are raising grandchildren under the age of 18 years old . If you are among this group, here are some key financial tips to help ensure you’re protecting yourself and your family as best as you can.
Analyze Your Retirement Goals
As a grandparent raising your grandchildren, your obligations now change. If you aren’t yet retired, you’ll want to revisit your strategies to see if you’re able to retire when you want — or if you have to keep working to afford your lifestyle. If you’re already retired, you’ll want to see if your current income strategies provide you with enough money to support your new financial needs. Be sure to adjust any investment strategies, such as annuities, to reflect your new goals.
Revisit Your Life Insurance Policies
With grandchildren living under your roof, you’re responsible for their wellbeing. And should something unfortunate happen to you or your spouse, you’ll want to make sure that you can still provide for your grandchildren without complications. Either revisiting your current life insurance policies or opening new ones can help you protect your family and grandchildren. With different life insurance options out there, you’ll want to identify which ones will best support your unique short- and long-term financial needs.
Explore Naming a Trustee
Life insurance benefits can’t be paid directly to a minor. So, if something does happen to you, your grandchildren could end up waiting on your life-insurance benefits for a long time as the court processes the information. This scenario would leave them in an unnecessary bind, so you should consider naming a trustee or contingent beneficiary. You may also want to open a family trust with your named trustee.
Restructure Your Tax Strategies
Living with dependents changes your tax liabilities — and tax benefits. A variety of benefits exist that can provide you with some financial help as you raise your loved ones. Here is a sample of options to explore with your financial advisor :
- Dependency Exemption
- Earned Income Tax Credit
- Child and Dependent Care Credit
- Adoption Credit
- Lifetime Learning Credit
Overall, raising your grandchildren can be an incredibly rewarding experience. Ensuring you take the financial steps you need to prepare for the journey while navigating your retirement years will help you stay ahead. If you’d like to discuss how to revise your insurance strategies or other financial concerns while raising grandchildren, we’re here to help.