Many Canadian grandparents are providing financial support to both their children and grandchildren, and a recent poll found that higher living costs are impacting their own finances as well as the support they can provide to younger generations.
On Wednesday, an RBC poll on family finances found that 21 per cent of grandparents over the age of 55 are supporting one or more adult children over the age of 25, while 30 per cent of grandparents have financially supported their grandchildren. The report also noted that “this financial assistance comes at a high cost.”
“While it’s not unusual for grandparents to provide financial assistance to younger generations, the dramatic difference today is this support has become a necessity, rather than simply a desire to help,” Craig Bannon, the director of RBC’s Financial Planning Centre of Expertise, said in a press release.
The poll found that among grandparents currently providing financial support to their adult children, giving financial gifts to their grandchildren or both, 54 per cent are “sacrificing” their savings to do so. Another 52 per cent either have made or will have to make “significant” lifestyle changes to continue assisting.
Other findings from the poll included that 33 per cent of grandparents providing financial assistance have concerns they will run out of money needed to continue their support while covering their own costs.
Additionally, only 20 per cent have considered the impact it could have on their retirement to provide this kind of assistance.
“This can be a financial drain that grandparents haven’t included in their budget. The closer they get to retirement, the bigger the impact unplanned costs such as these can have on their retirement savings,” Bannon said.
“And for those who are already retired and living on a fixed income, these added expenses can pose an immediate risk.”
Philip Petursson, chief investment strategist of IG Wealth Management, said in an interview with BNN Bloomberg on Wednesday that multi-generational support is “not necessarily new” but is becoming more common.
Multigenerational support is also part of changing inheritance arrangements, he added.
“If we are thinking about one generation, the older generation, helping the younger generations, this is the inheritance that we’ve been talking about; $3 trillion in this country that will be passed on from one generation to the next. It’s just not happening upon death, it’s happening before then,” Petursson said.
“If it’s providing stress to the older generation…that’s a problem and I think that should be avoided. But passing on an early inheritance isn’t necessarily a bad thing.”
‘Need to haves’
According to the poll, younger generations were found to be relying on the older generation for “need to haves” not “nice to haves.”
Around 70 per cent of respondents indicated adult children expected them to help with costs like food and clothing, with 54 per cent saying they provide this type of assistance each month.
Grandchildren were found to be receiving support for things like everyday living costs and education.
Methodology
Results from the 2024 RBC Family Finances Poll were derived from a survey commissioned by RBC between April 4 to April 10 among 1,508 grandparents over the age of 55 with children above the age of 25. Respondents were members of the online Angus Reid Forum.
