“We try to make sure the gifts are small enough relative to our clients’ overall assets and income so it’s inconceivable that it would cause a reduction of lifestyle in later years,” said Myers, a managing member at Fortune 360 Group in Plantation, Florida.
“My personal opinion is that my clients, in general, worked hard to accumulate their assets, and it wouldn’t be right or fair to risk that,” he said.
For co-signing a private student loan, the tricky aspect is that it might seem innocuous enough at the time. However, if your grandchild can’t make the payments at some point down the road, you could find yourself responsible at time when you’re relying solely on retirement income to stretch across the rest of your life.
More from Personal Finance:
This NFL linebacker saves 90% of his pay. Here’s how he does it
Here are the most and least affordable cities to live in
One way to get guaranteed income while delaying Social Security
“The concern I would have in a grandparent co-signing a loan is that depending on the nature of the loan — the terms, the amount, etc. — they could be putting their future lifestyle at risk,” Myers said. “I would certainly want to make sure I fully understood the maximum possible commitment and all of the loan terms.”
Of course, college tuition isn’t the only line item with a big amount next to it. More than a quarter (26%) of survey respondents spend an average of $1,746 on vacations with their grandkids, including travel to see them. For the 5% who cover major expenses — i.e., mortgage, rent, medical costs — the average annual outlay is $4,033.
Additionally, 13 percent of survey respondents struggle with the financial expectations of being a grandparent, which can make it more difficult to save for retirement or manage their own expenses.