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Grandparents Draw Line on Generosity

Jyoti Battish, 69, of Stroudsburg, Pa., says he and his wife spend a total of about $1,000 a year on their three young grandchildren. Some of the money goes toward small gifts, and a large portion is directed toward saving for their education. The couple give to their grandkids, he says, "because we want to show them love."

But while grandparents' love for their grandkids may have no limits, their financial support often does, according to a new study conducted by AARP Financial.

The survey of 600 grandparents age 50-plus found that 91 percent of respondents maintain they would not take on more debt in order to provide more financial support. While about one-fifth of grandparents say they have given a "significant" amount of money to grandkids for college tuition or provided money for basic needs, grandparents surveyed spent about $150 per grandchild each year. This spending was largely event-driven (birthdays, holidays) and not directed toward long-term goals or savings.

Many grandparents surveyed said limited financial resources and concerns about their own future constrained their giving. "What my grandmother and my mother were able to do for their grandchildren, I may not be able to," says retired teacher Caroline Andrews, 62, of Middlebury, Vt. "What money I end up with may need to be spent on me."

"Grandparents must balance their desire to give with their need to fund their own retirements," says Nancy Smith, vice president of AARP Financial. "As a grandparent, are you helping your family financially if you incur extra debt now only to need financial help of your own down the road?"

Grandparents also have concerns about their grandkids knowing the value of money: 57 percent are afraid too much giving would spoil their grandchildren.