What Is the Best Way to Save Money for Our Grandchildren?

Sep 28, 2022

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Many people choose to save money for their kids and grandkids in a 529 account, but one listener wonders if there is a better way to give. Learn the answer to this question and more on this episode of the Retirement Answer Man show.

Make sure to stick around until the end to hear the Coach’s Corner segment with Kevin Lyles. Kevin and I discuss growth and accepting challenges in retirement. Find out why it is so important to continue to challenge yourself in retirement. What is the best way to save money for the grandkids?

Like many people, Kathy saves money for her grandchildren in a 529 account, but she wonders if this is the best way to save for them. What if they choose not to go to college?

Before analyzing the best way to save for the grandkids, consider how you should think through this issue. What are your goals in saving for the grandchildren?

What do you want to accomplish? Do you want them to graduate from college without debt? Do you want to help them get launched to give them a great start to adult life? Do you want to buy them their first car or help them put a down payment on their first house? Think about your ultimate purpose for giving. Various methods that can be used for giving

If you would like to ensure that the kids graduate without debt, then, the 529 is an excellent vehicle to accomplish this goal. It’s also important to note that by keeping the 529 in your name you can change the beneficiaries from one child to another.

Another way to save for the kids is by creating a separate account in your name that you earmark for a specific child in mind. Then later on if that child veers down a wrong path, you can choose not to support their bad decisions. This option also allows for you to have control and you ensure that you aren’t making decisions for them too early.

The Uniform Gift to Minors Act provides a way to transfer financial assets to a minor without establishing a formal trust. A UGMA account is managed by you until the minor comes of age, at which point they assume control of the account. At this point, you relinquish all control over the funds.

If part of your goal is to help your kids while they raise their kids, then paying for private school or university directly is one way that you could do this. You can even pay directly for medical expenses as well. As long as you are paying the provider directly then you can give unlimited funds.

If your goal is to gift your assets as a part of estate planning, remember that you can give up to $16,000 to anyone you want each year.

Before gifting anything, understanding your motivation for the gift is essential. Find purpose with action to propel yourself forward

Thinking about things is, oftentimes, an avoidance behavior. The only way we discover who we are or the things that we enjoy is by doing them.

“A sense of purpose doesn’t come from thinking about it. It comes from taking action that moves you towards the future. The moment you do this you activate a force more powerful than the desire to avoid the pain of loneliness or inactivity. We call this the force of forward motion.” Phil Stutz.

Continue to challenge yourself physically, socially, and intellectually. By continually expanding you prevent rigid mindsets from setting in. Without challenge, the status quo sets in and while we may feel comfortable with our lives, before long we may discover that our lives will actually shrink without growth.

How will you challenge yourself in retirement? OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING

[1:10] Find purpose by doing things

LISTENER QUESTIONS

[2:45] Giving to grandkids
[10:44] Is there a list of the major retirement benchmarks?
[15:00] Who does the RRC consist of?
[17:22] Social Security claiming

COACH’S CORNER WITH KEVIN LYLES

[24:27] Try new things in retirement
[31:55] Developing new routines can help

TODAY’S SMART SPRINT SEGMENT

[34:10] Do what needs to be done not what you feel like doing

Resources Mentioned In This Episode
Rock Retirement Club
The Retirement Manifesto blog
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Roger’s Retirement Learning Center