Being thrust into the role raises many tough issues for grandparents. First and foremost, how will they afford retirement while handling the added expense that comes with raising a family? Providing food, shelter and clothing for kids is expensive, and the average income for grandparent-headed households is usually under $20,000.

Financial expert Chris Farrell, host of Twin Cities Public Television’s Right on the Money!, urges grandparents to think of themselves first. "You can't help your grandkids unless you've taken care of yourself," he says. "While your inclination is to put the child’s needs ahead of your own, you actually are serving them better by looking out for yourself first."

With that in mind, Farrell offers five practical suggestions for grandparents who face this situation.

1. Don’t Sacrifice Your Retirement
“When money is tight, many grandparents wonder how they’ll live in retirement and pay for their grandchild’s expenses,” says Farrell. “Funding a secure retirement should be seniors’ first priority.” Farrell cautions seniors against borrowing money from their 401(k) plans. While it might be tempting to dip into money previously earmarked for retirement, it’s not a good idea – and could be trouble in the long run. Grandparents should not stop saving for retirement under any circumstances, especially if they’re relatively young in age.

Still others imagine they should forsake funding their retirement and be putting money into a college fund for their grandchildren. But this isn’t the best use of their money either. “The child can borrow to go to college,” says Farrell. “The grandchild will have more time to pay back the student loan as opposed to a grandparent who faces a more limited time frame."

2. Know Your Resources
Resource savvy grandparents will look to see if they qualify for the Temporary Assistance to Needy Families program. Also known as TANF, this is a state-run program that offers financial help to families with a low income. Know going in that rules affecting grandparents and their grandchildren vary from state to state so you’ll have to contact the department of social or human services in your county or state to find out more.

Be sure to look for financial support and legal services assistance in your area. State and Area Agencies on Aging across the country have instituted programs and services to assist grandparent caregivers and help them identify and access available services. You can reach them at (800) 677-1116 or at www.aoa.gov. The AARP Web site also offers tips and information for grandparent caregivers.

3. Make a Will
Establishing a will and initiating estate planning become especially important for grandparents who are raising their grandkids. “Grandparents really need a will to make provisions for the child or children in the event something happens to them,” says Farrell. “It’s important to work with an attorney, name a guardian and appropriately allocate assets.”

4. Explore Health Insurance Options
If you are covered by medical insurance, look into adding your grandchildren to your policy. If that’s not an option, many states offer health insurance to help grandparents with their medical costs.

5. Find Support
It is also important to seek out emotional support. Grandparents who are raising their grandkids are prone to psychological and emotional strain as well as feelings of helplessness and isolation. They often neglect their own physical and emotional health because they give priority to the needs of their grandchildren. “It helps to reach out to others in similar circumstances for support and ideas,” Farrell says.

While the role of grandparents-as-parents isn’t easy, with good planning and plenty of support, there is a sense of joy and a daily sense of purpose and satisfaction that can come from guiding youngsters through life. For additional information from Chris Farrell on this and a variety of financial topics, visit the Right on the Money! Web site at www.rightonthemoney.org.

*Courtesy of ARA Content

Want to see more?

• Achieving Your College-savings Goals: Understanding the Keys to Success
• Life Insurance: What is It, and How Much Do You Need?
• Investing Your Way: Finding Investment Balance With Mutual Funds
• Talk about it!