Grandparents risking own financial future to support family

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Many Canadian grandparents are risking their own financial future to support their adult children and grandchildren, according to a new study by the Royal Bank of Canada.

The 2024 RBC Family Family Finances Poll — Grandparents Edition, which surveyed 1,508 Canadian grandparents (aged 55 and above) with adult children (aged 25 and above), said 21 per cent of them are currently supporting at least one adult child and 30 per cent have provided money to their grandchildren.

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More than half of them are sacrificing their own savings to provide this assistance, and 52 per cent have made or would need to make significant lifestyle changes to continue doing so. One-third even fear they will run out of money if they have to keep up the support and cover their own costs.

Also of concern is that only 37 per cent have reviewed their finances to see what they could currently afford to provide, and just 20 per cent have considered how it could impact their retirement plans.

“The closer they get to retirement, the bigger the impact unplanned costs such as these can have on their retirement savings,” Craig Bannon, director of RBC’s financial planning centre of expertise, said in a press release. “And for those who are already retired and living on a fixed income, these added expenses can pose an immediate risk.”

Most grandparents seem to be providing financial support out of necessity, with 70 per cent of them saying that their adult children expect them to help cover necessary costs such as food and clothing. Support for everyday living costs is also the top gift for grandchildren (30 per cent), second only to education expenses (39 per cent).

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“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,” Bannon said. “This can be a financial drain that grandparents haven’t included in their budget.”

The survey said 54 per cent of grandparents are providing this money at least monthly, but 43 per cent don’t know how much they’ve given their adult children and 34 per cent don’t know what they’ve given their grandchildren.

“If you’re covering essentials for younger family members on an ‘as needed’ basis, it can be challenging to keep on top of these amounts and how they are affecting your cash flow and savings,” Bannon said.

He recommends grandparents have open conversations with their adult children early and often to set clear expectations and to look beyond today to understand how the financial support they provide may affect their own future.

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Canada continues to grapple with meeting its housing construction targets. Until recently, a shortage of skilled trades was seen as the primary obstacle to housing construction growth. However, recent data reveals a troubling trend: while the number of construction labourers has reached an all-time high, construction activity has not followed suit, resulting in a significant drop in productivity. The discrepancy between workforce growth and construction output is yet another challenge for a country struggling to reach its housing goals, write Murtaza Haider and Stephen Moranis. Read more.

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• G20 finance ministers and central bank governors meet in Rio de Janeiro
• Today’s Data: Ottawa’s fiscal monitor for April and May, U.S. income and consumption for June, University of Michigan consumer sentiment index for July
• Earnings: Canfor Corp.

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Today’s Posthaste was written by Noella Ovid, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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