RBC survey reveals many Canadian grandparents provide financial support for essential expenses
A new RBC family finances poll reveals that almost one-quarter of Canadian grandparents are providing financial support to adult children (aged 25+) and 30% are doing so for their grandchildren. In addition, for 54% of these grandparents, support for adult children is now being provided at least monthly.
This is to help cover basic necessities like food and clothing due to rising living costs.
Canadian families have experienced higher prices for essentials such as food, housing, and heat, along with discretionary spending on self-care and sports activities, prompting grandparents to step in more frequently.
Craig Bannon, director of the Financial Planning Centre of Expertise at RBC, explained that this financial support has become a necessity rather than just a desire to help younger generations.
The survey found that almost 70 percent of Canadian grandparents who provide support to their adult children say this support is now expected to help cover necessities. Of the grandparents who provide money to grandchildren, 39% assist with educational expenses, while 30 percent help with living costs.
Additionally, Statistics Canada data indicate that the number of adults aged 20 to 34 living with at least one parent increased from 30.6 percent in 2001 to 35.1 percent in 2021.
The RBC poll found that the average yearly financial contribution from grandparents to their adult children was $6,945, while the average aid to grandchildren was $4,002. This financial support is similar to the Canada Child Benefit, which is expected to be about $6,570 in 2024.
Bannon noted that this financial drain can impact grandparents' retirement savings, especially as they approach retirement or if they are already living on a fixed income. Most grandparents providing financial support worry about the impact on their own finances.
Over half of the surveyed grandparents (52 percent) who provide financial support said they would need to make significant lifestyle changes to continue helping their children and grandchildren.
Nearly a third (29 percent) of these grandparents proving support are concerned that their current level of financial support will be insufficient in the coming years, prompting them to increase their after-tax, out-of-pocket aid.
The survey revealed that 34 percent of grandparents providing support were unsure how much money they had given to their grandchildren, and 43 percent did not know how much they had given to their adult children.
Only 37 percent of those providing support had reviewed their finances to see how multi-generational support would affect their retirement plans. Just over half (54 percent) responded that finding money to help their family would require sacrificing their own savings.
RBC suggest the following tips for grandparents to help them manage their finances effectively:
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Have open conversations with your adult children early and often. This will ensure expectations are clearly understood, and existing or upcoming financial support doesn't overstrain your own resources.
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Connect with a financial advisor who can help you build a plan that includes how much money you expect to provide and see how that matches your current cash flow. Once that's set up, check your plan regularly to stay on track.
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Look beyond today, especially as you get closer to retirement. It's important to understand how any financial support you are providing now may affect your savings and your ability to cover your own future costs.
