Sandwich Grandparents

We frequently talk about children of aging parents taking charge of the financial well-being of those who raised them. What about the financial challenges of the “Sandwiched Grandparents”? According to recent stats, there are 2.7 million grandparents raising grandchildren at a time in their life when they should be saving for retirement. Take Monica and Jake for example…

grandfatherMonica and Jake are in their early 60s. Monica is a former schoolteacher, and Jake expects to retire at 67 from an engineering job with the State of Ohio. Looking forward to retirement, they downsize to what they call their “everlasting house”—a single story 2-bedroom home on a little lake, just perfect for retirement years. Six carefree months pass before they hear devastating news—their only son, Jess, an Army veteran with a wife and child based in California is killed by a roadside bomb while serving in Afghanistan. His widow Darlene is now the sole caretaker of 5-year Melody, but at the funeral they are once again hit with an emotional bombshell: Jess’s widow Darlene struggles with drug addiction. Monica and Jake take temporary custody, and two years later, full custody.

Variations of this story affect millions. University of Toronto professor Esme Fuller-Thomson, is an expert in the phenomena of grandparents raising grandchildren. She says in an interview, “You should be saving for retirement; instead, you’re spending your savings and it’s very hard to get back to work.” She adds, “People who are older and living on fixed incomes really have a hard time stretching to meet clothing and bigger accommodation issues like having a larger home, and child-care issues.”

Apart from the financial downside of being a “sandwich grandparent” is that kids, especially very young ones, are constantly passing on their exposure to colds and other ailments; and grandma and grandpa get a lot less sleep. But the rewards often outweigh the risks knowing that their grandchildren are well cared for and their own lives are more active and meaningful.

In 1997, the Ohio General Assembly directed the Ohio Department of Aging to organize and chair a special “Grandparents Raising Grandchildren” Task Force. Information is available here. The Ohio Department of Job and Family Services offers a downloadable report Ohio Resource Guide for Relatives Caring for Children.

If you have a family friend or relative that is experiencing the joys and challenges of being a Sandwich Grandparent, we encourage you to forward this blog. If we can help with any money management issues or answer any questions, please call us at (513) 322-1036.

2017 Financial Goals & 2016 Tax Tips

Being a member of the American Association of Daily Money Managers (#AADMM) validates my skill level and adds to my credentials. But it does much more! It provides us with knowledge and resources that we can share with those we help.

The Financial Goals for the New Year & Tax Prep Tips checklist is one of those resources. We have included the checklist below for your review, or you can download the PDF that you can print for reference as you prepare your 2016 taxes. If you have questions about any of these Goals, please call us!

Financial Goals

  1. Revisit your budget or create a new one. Year-end is an ideal time to assess spending and determine if a budget adjustment will help you meet your financial goals.
  2. Consider starting the New Year with less paper by switching to electronic versions of paper statements.
  3. Evaluate accounts before year-end to see if any can be closed or consolidated. Eliminating extra accounts will mean fewer 1099s.
  4. Automate routine bill payments to eliminate service interruptions. Create a bill checklist to be sure critical payments are not overlooked. For instance if an insurance bill was lost in the mail, is there a trigger that would remind you when payment is due?
  5. Create an emergency cash fund to cover 3-6 months’ worth of living expenses. One option is to put a specific amount from each paycheck into a separate account, using automatic transfers. Alternatively, you can use bonus checks, rebates or tax refunds to fund your “rainy day account”.
  6. Evaluate your filing system. The New Year is an ideal time to evaluate ways to improve access to critical information.
  7. Review all financial documents including mortgage, retirement plans, Health Savings Accounts (HSA) and other investments to determine if changes are required to adequately diversify and be tax efficient. Also, review auto and home insurance coverage to see if you can save money by having your coverage with the same company.
  8. If you receive a pay raise, consider putting the extra money in a savings account or use it to pay down credit card debt.
  9. Monitor your credit report. Request your Free Credit Report and fix any errors.
  10. Be sure to update your estate documents, e.g. wills, trusts, power of attorney for health care and for finances, and child’s guardian. Also, make sure named beneficiaries on all life insurance policies and financial documents are current.

Tax Prep Tips

  1. Label and set aside a large manila folder or envelope for tax related information (W-2s, 1099s, year- end bank, property and investment statements, medical and dental expenses, education expenses). When you receive a tax form in the mail, review it to make sure it is correct and place it in the folder or envelope.
  2. Decide if you are going to do your own taxes using an online program such as Turbo Tax or hire a CPA. If using an online program, make sure it is easy to understand and excellent customer service is available.
    If hiring someone to do your taxes, find out their deadline to have documents delivered to them for filing. If you wait too long to get your information to the tax professional, they may not be able to file your taxes on time and an extension will need to be filed. This is important in the event you owe for the tax year as penalties and interest will be added to the unpaid tax on a daily basis after April 15th.
  3. Review previous year’s tax return and review Schedule B for interest and dividends paid to make sure these are included in current year. Also, check Schedule A for last year’s deductions.
  4. Review credit card and bank statements for possible deductions at tax time.
  5. Request printout from your pharmacy of drugs purchased for the taxable year.
  6. Make sure Required Minimum Distribution (RMD) is taken by the year-end.
  7. If you plan to itemize charitable contributions on your taxes, it’s important to gather all receipts for these donations; include the date donated, a description of the items, the fair value and the approximate purchase price and date.
  8. To claim the childcare credit, you should gather the information for the amount paid, who you paid and their social security number or employee identification number.
  9. Remember to file both state and federal taxes.

AADMM is a national membership organization representing individuals and businesses in the growing profession of daily money management. These professionals provide financial services to seniors and older adults, people with disabilities, busy professionals, high net worth individuals, small businesses and others. AADMM’s mission is to support daily money management services in an ethical manner, to provide information and education to members and the public, and to develop a network of dedicated professionals.

©2016, American Association of Daily Money Managers