Tag Archives: Retirement

Feb 23 2012

Encourage Saving

English: The Miz's Money in the Bank briefcase

Image via Wikipedia

Matching Contributions When Your GrandKids Save

I am always on the lookout for great ideas that help encourage my gradchildren to start (and keep) saving.  I recently heard about some parents providing a matching contributions to their children’s savings accounts and thought – Brilliance!  As many of you are aware,  part of leading your grandchildren into having great money habits is helping to steward your Grandchild’s saving.

The way this idea works is very simple: YOU provide matching contributions when your grandchildren decide to put money in a savings account.

How Much Should you Match?

At the most basic level, you can match the contribution, dollar for dollar, when they set their money aside for the future.

You may decide to offer a 50% match, so that if the child decides to put $3 in savings, you contribute another $1.50, to bring the total to $4.50.

Another option is to offer a sliding scale. If your grandchild sets aside 20% of his or her income from a job or allowance, you can match it dollar for dollar. If he sets aside 10%, you can reduce it to 0.5o cents on the dollar, and then at 5%, you can match with 0.25 cents on the dollar. This will encourage some children to set more aside.

Why Match?

Just like a contribution to a 401K, with a matching contribution, your grandchildren can see their money add up quicker. This can get them excited about saving, so that they can watch the bank balance grow.

Also, this practice can provide kids with a foundation that will lead them to take advantage of 401k match opportunities in the workplace. Plus, it will help build a nest egg sooner, and you only have to do some of the heavy lifting… think ipad, car, college. What big gift would you give if you could?  Now here is a great way to start contributing and give your grandchild stake in their own future as well.

Any Twists?

Of course you can shape this anyway you want to. On top of providing a matching contribution, you can also have a “vesting” period. With most employer-sponsored retirement account matching programs, there is a vesting period. Before you can consider the money contributed by the employer as truly yours, you have to be an employee for a certain number of years. You can set up a similar program with your grandchildren: they can’t withdraw money from the savings account until at least a certain amount of time has passed.

Requiring a vesting period is a good way to help your child delay withdrawing the money. Plus, if your child gets the matching contribution from you, and then withdraws the money two days later, the purpose of the lesson has been defeated. However, if you are consistent in your efforts, and you provide a reward that your children can see grow, there is a stronger likelihood of the lesson sinking in.

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Jan 24 2012

Raising Grandchildren

According to recently released census figures, eight percent of American children lived at a grandparent’s home in 2010. That’s a record high for at least the last 40 years, and almost four times the rate in 1970. And to put that into perspective for you, only 13 percent of us have reached retirement age!  Demographers attribute that increase to a growing number of unemployed young parents who are relying on the older generation for help.

In the past, grandparent-led households were seen disproportionately among certain groups, like African American grandmothers. But now, with the widespread impact of the recession, active grand-parenting is increasing across the board.

The financial plans that you may have made based upon traditional frameworks: taking care of each other, your home, vacationing, just being your average, retired older couple, are likely now being redefined.  Many people who relied on pensions and government plans, like social security, or saw their investments dwindle by 40%, are finding that the dollar just doesn’t go quite as far when there are additions to the household.

Setting new expectations for retirement is key to achieving financial security and happiness.  It is important to start with knowing what you will do – With grandchildren in your house you are Retiring TO Something… not away from something.

1. Start by Making  Goals

What is it that you want to accomplish in your retirement?  Do you want more time with your family?  Have you always wanted to volunteer your time to a cause you believe in?  Do you want to wake up every morning and have a quiet cup of coffee?  Your goals are as unique as you, and no two people will have the same ideas, start your retirement off by defining yours!  Then figure out how to work your grandchildren into them, most charities can always use extra hands, even if they are small.  Coffee can be just as enjoyable fifteen minutes before everyone else wakes up, and perhaps a tea party with Teddy can substitute if you have very early risers.  A little planning and you can have your cake and eat it too!

2. List Your Likes and Dislikes

Everyone has things they like to do, and things they do not like to do.  List them out.  Teach your grandchildren about the things you enjoy doing so you can spend your time together on those activities.  I taught my then-ten year old grandson to crochet. He loved having his younger cousins use the blankets or wear the hats he made with my extra yarn. 

3. Know Your Expertise

Are you an expert salsa dancer or do you know your fine arts? Can you make technology hum like Steve Jobs?  Are you a financial wiz?  Share what you are great at with your grandchildren.  School can only teach the basics, it is the adults that surround them that they learn from.

4. Stay Active

Kids are a sure fire way to keep us moving!  And exercise and activity are important for staying healthy long into your retirement.  Take advantage of toting that six month old, shifting her from left to right arm to maintain equal balance.  Get up and play kick with your toddler, it improves their hand eye coordination and provides you with cardiovascular benefits.  Sure, it might make you want to take a nap when they go down, but hey, why not? You’re retired!

5. Do Your “Homework” Every Week

A tip often repeated by single mothers everywhere is plan out your week in advance like it is a job. Then you will know what you have to accomplish and how much to budget for it, and you can adjust if you are lean on time or money in advance.   Know when you will have the grandkids, and what you are going to do each day you have them.  Is this week Cinderella’s Adventures, and everyday your princess troupe is going to read stories and watch movies about Cinderella, make up new stories of their own about what happens next, make crowns out of construction paper, and put on mouse noses or bird beaks during clean up time?  Make every day special by taking the time to think though how you can show your grandchildren you love having them with you.

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