Today’s grandparents spend an average of $2,562 annually on their grandchildren, spending money on various expenses such as gifts, vacations, and education. 

Here are 3 tips for helping your grandchildren once you’ve saved enough money for retirement.

It’s Simple - Cash!

• Giving your grandchildren cash is the simplest way to let them use the money however they please.

• Keep the annual gifting under $16,000 per year. If you gift over $16,000 a year, you will start encountering gift taxes. You and your spouse can each give each grandchild a gift of $16,000 and not have to pay taxes on it.

• If you want to control how and when your monetary gift is used, you might want to consider a trust, custodial account, or 529 plan.

Qualified Tuition Plan (529 Plan)

• A 529 plan, or a qualified tuition plan, allows you to save for your grandchildren’s education, making sure the money is used for educational purposes. The money you put into this account would not be taxed.

Trusts / Custodial Accounts

• With a trust account, you can choose to distribute the funds in installments or when they reach an accomplishment such as a college degree or an income level. A custodial account is similar to a savings account, and its funds can be used for anything.

What about your retirement?

Don’t help your children or grandchildren so much that you run out of money for yourself. Before you give, make sure to assess your own retirement plans.

Check out our Traditions First Bank  Financial Calculator.

If you have any questions about budgeting or savings accounts, we are here to help. Traditions First Bank’s mission is to provide banking services to clients based on our highest values while investing in our community. Contact Traditions First Bank today.