The bank of grandma & grandpa

A third of grandparents who provide financial aid to family worry they won't be able to cover their own costs, but there's a way to gift without getting burned

- LORA GRADY

Amid high inflation and the rising cost of raising children, grandparents are helping younger generations with everyday expenses - but some may be risking their own retirement savings in the process.

A recent RBC survey of 1,508 Canadian grandparents aged 55 and older found that 21 per cent are supporting at least one adult child (25 and up), and 30 per cent have provided money to their grandchildren.

"This money is being used for 'need to haves' not 'nice to haves," says Craig Bannon, director of RBC's financial planning centre of expertise. In fact, 54 per cent of those providing financial assistance are providing more money due to rising costs, and 58 per cent are helping to cover expenses such as food and clothing.

Seventy per cent of those providing help say they're expected to cover necessary costs when their adult child or children can't afford it.

"Families struggling with the high cost of living are leaning on grandparents to help out and this is placing more pressure on these older family members," says Bannon.

The cost of living is indeed a huge factor in this trend, says Nancy Grouni, a financial planner at Objective Financial Partners in Markham.

"The consumer price index rose 3.9 per cent on an annual average basis in 2023, and that was followinga 40-year-high increase of 6.8 in 2022," she says. Unfortunately, average earnings have simply not kept pace with the cost of living, she adds.

That's why Diane Kellett, 67, is always willing to help her two adult children and grandchildren when they're struggling.

Both grandchildren, 15 and 16, need their wisdom teeth removed and the dental procedure isn't covered by the Ontario Health Insurance Plan (OHIP). Her daughter can't afford the costs, so Kellett has offered to pay.

"It's not money for them to go buy candy," says the Minden, Ont., resident, adding, "I honestly don't know how families are getting by without help."