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I’m recently retired at age 55 for one 1 year now and have been living common law for 8 years with a woman who is now 50. I have two children; ages 27 and a married 30 year old with two children ages 6 and 10 (my grandkids). My wife’s children are 20 and 23 and live with us. When I retired I received a substantial lump sum payment of 1.4 million in cash in lieu of a monthly pension. This sum made over $170,000 last year in investments alone. Our net worth is over 1.6 million and my wife will retire in 5 years and at that time will be able to collect over $500,000 in cash or a yearly pension of $45K. Money is not an issue in our lives.
I like to spoil my grandkids a bit and give them things they wouldn’t normally receive, things like horseback riding lessons, overnight trips to a waterpark, amusement park season passes, summer camps, day trips to the city, eating out, etc. In total I would limit spending on both to no more than $5000 per year. My daughter works part time and her husband is a paramedic who works constantly so by taking the kids out it also helps my daughter get caught up.
My question is, do you think $5000 per year for both grandkids is too excessive? This issue has caused many heated arguments as my wife feels that I think the lump sum is MY money only and am not thinking about making it last until we die. She also thinks my daughter and her husband should be paying for the grandkids activities. I have done many calculations with my financial advisor on how to manage this amount of money so I feel extremely confident that $5000 per year on the grandkids is completely manageable. I would prefer to help my kids, my wife’s kids and the grandkids out now so I can see them enjoy themselves now. I spend very little on myself as I would prefer to spend on others. The last thing I want is to be 90 years old with a pile of money that could have helped my family 30 years previously. I also feel that since I was the one who brought the 1.4 million into the relationship I should be able to decide where to spend $5000 of it each year.
-Spoiling Grandchildren is Causing Marriage Problems
Dear Spoiling Grandchildren,
I am not a financial advisor, but your description of the issue and your decision process seem sound to me. You have really thought through this issue, including checking the math with your financial advisor and establishing a limit on the yearly financial contribution. Now the challenge is getting your partner to agree on the outcome.
This is a discussion about values. At this time, it sounds like your partner’s primary values are about security and a belief in self-reliance (your children should support your grandchildren). It is possible that these beliefs come from a place of hurt in her past. Perhaps she wasn’t well provided for as a child or had a harsh family who was punitive towards efforts to help others. I’m not sure, but I think if you approach her in the right way she will also be supportive of your decision.
It is possible that these beliefs come from a place of hurt in her past.
I think the place to start would be in helping her fully understand the financial security that you have. Of course no financial plan is impenetrable, but given your resources, a smart investment strategy that adjusts as you go along should ensure financial security for the rest of your life. It may be helpful to bring her into your financial advisor so that all of you can have a detailed discussion about the plan you discussed.
Secondly, the self-reliance belief seems a bit misguided in this circumstance. These aren’t strangers that you are donating money to, these are your flesh and blood grandchildren. If grandparents helping their grandchildren experience certain amenities isn’t self-reliance, I must be missing something. Lastly, you didn’t mention this as being an issue, but I would strongly consider discussing all of this with your children (their parents) first. They may be deeply appreciative for your financial support but including them in the process would be an inclusive approach.
Dear Spoiling Grandchildren,
I bet you are a great grandfather! Thank you for sharing your question. I can only imagine this issue is weighing on your marriage and your heart. You are selfless in wanting the best for your family while considering your wife’s feelings. Financial discussions no matter where you are in your marriage or life can be difficult, especially when there is a lack of agreement or major conflict on a topic.
If you would prefer to help your kids now, then it seems you are making well above your means to do so. My grandparents on both sides were incredibly generous financially. They set an example for our family that I strive to repeat for my future children, grandchildren and great grandchildren. Not only did they allow us to have special cultural experiences and give us academic support, but it was the selflessness and love in their giving that has become a gold standard for our lives. My parents are the same. It makes a difference in the lives of those receiving these special gifts and is incredibly appreciated.
It makes a difference in the lives of those receiving these special gifts and is incredibly appreciated.
Communicate to your wife the importance of this financial decision. Take the time to sit down and look at your financial resources so you both feel confident in your financial future. By having a grasp and understanding on your acquired wealth it is easier to make these decisions together.
If your financial advisor is needed to help mediate, by all means include your wife in a discussion with him or her. Once the decision is made, respect the other’s decision on where you choose to gift or spend your money. Communication is invaluable in this decision as well as helping your wife understand the importance of your desire to gift a bit of your fortune to family.