Smart Ways Grandparents Can Help Without Hurting Retirement

Written by Dawn Allcot is a personal finance writer with more than two decades experience

Smart Ways Grandparents Can Help Without Hurting Retirement

Millennials are often recognized as the first generation who will end up less well off financially than their parents. The "sandwich generation" pressures to take care of kids and parents has put enormous emotional and financial stress on this generation.

That said, older generations also don't have it easy. Baby Boomers and Gen Xers are facing rising costs that are eating into their nest eggs faster than possibly imagined and slowing down the ability to save for retirement. Roughly 66% of seniors (Boomers) surveyed this year by Pollfish said they’ve cut back on spending as a result of inflation. And 57% of Gen X said they’re concerned they won’t be able to afford retirement, per a survey from Northwestern Mutual.

At the same time, grandparents want to help their children and grandchildren, adding more pressure in tight financial times. Following are important steps and ways to help your children and grandchildren without hurting your own retirement.

Get Your Budget in Order

Put your own interests first. A strong plan today protects your tomorrow, and allows you to give and help with confidence.

Think of it this way; one of the best ways you can help future generations is to ensure you won’t be a future financial burden on them and that you can support yourself throughout your retirement years.

You won’t know how much you can reasonably contribute to your grandchildren without establishing your own budget, first. To learn more about how to budget and why most budgets fail, make sure to check out our post on budgeting.

Create a plan you can stick with and track your income and expenses for at least a month. Look for ways you can cut back without sacrificing your lifestyle.

If treating your grandchildren to a fun day at a local theme park or contributing to their savings account or college fund is important to you, include it in your budget. You’ll know exactly how much you can afford without jeopardizing your retirement savings.

Pay Attention to Gift Tax Exemption Limits

If you’re doing well and you want to gift your grandchildren large sums of cash that they can spend, save, or invest, be mindful of IRS gift tax exemption limits. This IRS policy allows you to gift the money to your kids without having to pay taxes. In 2026, you can gift up to $19,000 per recipient or $38,000 per recipient for married couples without paying taxes on that money.

There’s also a lifetime gift tax exemption to be aware of, which is $15 million per individual; it adjusts annually based on inflation.

Working within IRS guidelines gives you the power to plan and support family without creating unexpected tax implications.

Pay Medical Expenses Tax-Free

One of the biggest ways you can help family is to assist with payment of medical bills. In general, the stress of medical bills is impacting daily life. The average adult is paying over $1,500 per year out of pocket for uninsured expenses. This creates anxiety, delays treatment, damages credit and compounds emotional stress. If your adult child or their family has unpaid medical bills, the IRS allows you to pay medical expenses directly to providers, tax free. This is a powerful way to help and save, both emotionally and financially as Americans are, in general, delaying care and/or relying on savings and credit cards to pay uncovered medical expenses.

Pay Primary or Secondary School Tuition

You can also pay school tuition directly to schools, tax free. If your grandchild goes to a private school, you can pay those bills directly to the educational institution without it counting toward your annual or lifetime gift tax exclusion limit. And it helps their future without impacting yours.

Payments to K-12 institutions fall into this category. Preschool tuition may count if the program is primarily educational with licensed teachers rather than a daycare center.

You can also pay trade school or college tuition with no limits, as long as you pay it directly to the school.

Contribute to a 529 Savings Plan

If you have modest amounts to contribute and aren’t concerned about approaching the gift tax exemption limit, a 529 Savings Plan is a great way to help your grandchildren prepare for the future. This is a gift that keeps on giving, as the contributions grow tax-free and will help support the lives of your grandchildren well beyond the limits of your own life.

If your child doesn’t go to college, you can transfer the account to another person, use it for your own continuing education, or roll it into a Roth IRA for your grandchild.

Fund a Roth IRA

If your grandchild is working, even if they’re a minor, you can open a custodial Roth IRA to give them a head start on retirement savings. A Roth IRA is the preferred choice by experts because it’s funded with post-tax dollars and grows throughout their life. Since most teens working are in the lowest tax bracket, the long term benefit is even greater.

Hire Them to Work in Your Business or Side Gig

If you’re still working and have your own business, you can put your grandchild on your payroll and also contribute to a Roth IRA with their earnings. Check IRS laws based on the type of business you have and consult with a tax professional because rules vary.

Essentially, you want to make sure you’re paying them fair market value for the type of work they’re contributing to your business.

Add Their Name to Your Credit Card

If you have excellent credit, your grandchild can benefit from your credit history without the risk of them maxing out your credit card with reckless spending.

Adding your grandchild’s name as an authorized user to a longstanding account with a history of on-time payments will help build their credit score. You don’t have to give them an actual card to use for spending; just having their name on the account helps them. Check with your credit card company for age requirements for authorized users.

If you feel your grandchild can be financially responsible and you want to give them a card as an authorized user of your account, set a spending limit for them. Download your credit card app to get notifications every time they use the card to make sure they are charging responsibly within the limits you set.

Shop Thrift Stores to Stretch Your Dollars

Help your own budget and teach valuable finance and planning lessons to your grandchildren by thrifting. You can find children’s clothes, toys, high-quality furniture and even retro collectibles your grandkids will love at thrift stores and online platforms like Facebook Marketplace and OfferUp.

Of course, you'll want to get your kids involved, but everyone knows kids outgrow clothes quickly. And finding great deals and the latest fashion is a fun thing to do together with your grandchildren. When you find high-quality, name-brand clothing and shoes that are barely used it'll be a "high five moment" you can share together.

For context, four-in-10 millennial and Gen Z shoppers “always” or “usually” check resale platforms before they buy something new, and 47% said they’d buy secondhand even if they could afford new products, according to a survey from CouponFollow.com. Share the lessons and the fun with your grandchildren.

Share a Home with Your Kids (and Their Children)

With rising housing costs, multigenerational home buying is having a moment. In 2025, nearly one-in-six homebuyers bought a home with their adult children or with their parents. This move helps you as well as your children and grandchildren by reducing housing, child care and utility costs across the board. It's not for every family, but if you can share space with your kids and grandchildren, the overall savings can change lives. And the opportunity to strengthen bonds and provide support across generations is arguably more valuable than any financial benefits of living together.

Babysit

Babysitting doesn’t cost you anything. It keeps money in your kids wallet. And it creates an nurtures bonds across generations that can't be valued. It also provides physical, mental and emotional benefits for the whole family. For you, it's a way to stay mentally sharp, buffering against cognitive issues. You'll also get your steps in and exercise helps keep you young. For your grandchildren, the benefits of unconditional love and the extra stability are invaluable. You'll be a core part of their growth and life. And for your children, the financial relief may only be outdone by the emotional benefits of seeing the sandwich generations live and love together. It's a win, win, win.

Use Frequent Flier Miles to Visit Often

If your grandchildren live far away, you can still share your time with them. Learn a few ways to travel hack using credit card rewards and frequent flier miles and visit as often as your schedule and budget allows.

Teach Them Valuable Life Skills

Whether you’re living under the same roof as your grandchildren or you visit every few months, use some of the time together to teach them valuable skills and pass on family traditions.

Do you know how to sew, paint, crochet, or garden? Do crafts? Ceramics?

Share your hobbies with your grandchildren. Pass on beloved family recipes and cook together. Do all the things their parents may not have time to do in the chaos of working and raising families.

These skills obviously have values as hobbies but can also be monetized as side gigs. Share your knowledge and your stories to enrich your grandchildren’s lives and, potentially, their future wallets.

Remember, Some of the Best Memories Are Free

Local libraries offer crafting events, story time, and even free or discounted trips to local museums, attractions and performances. If you’re on a tight budget, this is a valuable resource to give your grandchildren over-the-top experiences they will remember forever.

But every moment doesn’t have to be brag worthy on social media. Spending time in the local park and actually looking when they say, “Grandma, watch this!” is priceless.

Making time for your grandchildren is the greatest gift you can offer and it’s completely tax-free.

Conclusions

Helping your children and grandchildren isn't always about money. It doesn't have to be about writing checks or sacrificing your own financial security.

Children rarely look back to remember how much money a parent or grandparent spent on them. Kids treasure and remember who showed up to their soccer games, listened to their stories, taught them life lessons, and made them feel loved. Financial assistance is valuable and creates security and eases parental stress. But your wisdom, encouragement, traditions, and presence are often worth far more.

That said, you also don't want to become an unintended burden. One of the greatest gifts you can give future generations is the confidence that you'll be able to support yourself throughout retirement without becoming financially dependent on them later in life. Plan, stick to your budget and allow your children and grandchildren to treasure your time.

Helping future generations involves a combination of financial planning, strategic use of tax rules, and generous investments of your time. Whether you're contributing to a 529 plan, helping with tuition or medical expenses, building a grandchild's credit history, or simply sharing a family recipe and an afternoon together, every act of support can have a lasting impact.

Whatever you do, just remember your time, lessons, experiences and love are worth every bit as much as your financial support.