Regardless of the size of a grandparent’s nest egg, providing substantial financial support to grandchildren will change their approach to money.
“More aggressive spenders may have to make adjustments to support their grandchild,” said Dustin Wolk, a Milwaukee-based certified financial planner. “Occasionally, you see one-time assistance [like helping pay a grandchild’s tuition]. More often, it’s longer-term,” and that involves a recalibration of a grandparent’s risk tolerance.
“We look at derisking and reassessing their portfolio,” Wolk said. “Depending on what they’re trying to achieve in helping their grandchildren, what expectations they’ve set and the financial repercussions, we may slide down the risk scale with their short-term and medium-term dollars.”
As they rethink their willingness to take investment risk, a grandparent’s love can drive them to make sacrifices. They may deny themselves the luxuries they anticipated in retirement or work longer than they had planned.
Read more in MarketWatch.