Tips and Inspiration for
First-Time Grandparents
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Senior Editor
Georgia Witkin, Ph.D., takes a look at the issues that grandparents are talking about today
Watch the video & get the answers
Paying for College Starts Today
The cost of a college education is rising, so kids (and their parents) will need all the help they can get. A terrific way to start saving for those sky-high tuition bills is with a 529 plan. Here are answers to a few basic questions you might have about these plans.
Q: What exactly is
a 529 savings plan?
A: A 529 savings plan (named for Section 529 of the Internal Revenue Code) is a tax-advantaged way to save for qualified higher-education expenses. Almost every state offers a 529 plan – some even offer more than one – so you can choose from many options. A 529 plan allows your money to grow tax-free, and you can withdraw your earnings tax-free as long as they are used for educational purposes. Another plus: The funds remain under your control, not the beneficiary's; there's no chance Junior will blow the money.
Q: Who can contribute to a 529?
A: Anyone can contribute to a 529 plan. A married couple can contribute up to $24,000 a year (or $12,000 per individual), up to a maximum value of $250,000. There is also a provision that allows a lump-sum contribution of $120,000 per married couple or $60,000 per individual.
Q: Do I have to invest in my own state's plan?
A: No. You can invest in any plan you wish. But keep in mind that there may be additional tax benefits if you invest in your state's plan. For example, currently, many states let you write off some of your contributions.
Q: Will my grandchild have to go to school in the same state as the 529 plan I choose?
A: No. Your grandchild will be able to use the funds for qualified higher-education expenses in any state.
Q: What if my grandchild doesn't go to college?
A: We often refer to college when talking about 529 plans, but your grandkids can use the funds for any post-high-school education. So if your grandchild wants to be an auto mechanic or a massage therapist, for example, a 529 plan will cover the fees for the trade-school courses.
If your grandchild forgoes higher education altogether, and uses the money to, say, buy a house, then the earnings will be subject to regular income taxes as well as a 10 percent penalty. You can always change the beneficiary of a 529 plan.
A Word of Caution
In the current economic climate; however, financial advisors agree that grandparents must put their own needs first. "People will loan your grandchildren money to go to college, but they won't loan you money for retirement," says Jeffrey Daniher, the co-owner of Ritter Daniher Financial Advisory in Cincinnati and the father of three college-bound students. Daniher says he has emphasized this message to clients in recent months.
During a downturn like this one, Daniher says, retirees must maintain flexibility by keeping their financial assets in their own names in case they need to tap them. Above all, grandparents should avoid selling investments at the worst possible time – when the market's dropping – to maintain investments in a child's college fund.
$12,000
You can make gifts of up to $12,000 a year, per grandchild – tax-free.
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Grand
Wisdom
Members of the Grandparents.com community tell you what they think is the one piece of advice that will make your life as a grand better
Have Fun
Sometimes, laughter is all you need
Listen to them, laugh with them and love them ...
– punkiesgrammy
Read to your grandchildren at every opportunity. Even when they think they're too old to sit on your lap and cuddle, they will still get right next to you to hear the story and look at the pictures in the book. There's nothing like the feeling of a small warm body to hug! – bgpalmer23
Remember to take pictures of that darling baby frequently. They grow and change so fast, you don't want to miss out on some of those delightful pictures. – mcpenguin5
Take the Time
Make the most of every moment
Love the times you are together, because they are memories you will store in your heart should they move away like mine. – doctobe
Cherish and enjoy every moment of being with your grandchild – the first smile, word, step, tooth. It is truly a journey you will love and never forget. Being a parent was a joy for me but being a Nanny cannot be described in words. – smzecfc7
Always take time for your grandchildren. They grow so fast that you'll miss it if you blink your eyes. – grannysal
Make all of the memories you can while you can. Like your children, they grow too fast!! Let them know that you're there – and be there for them. – mamaw24
Don't bring gifts every time you see them. Soon you become the gift giver. You want them to love you because they love being with you, not because you are a toy dispenser! Do fun things together, fix fun foods for them, teach them things. These are the things that build happy memories. – mcpenguin5
Make Smart Choices
These small strategies pay big dividends
Have fun with them but teach them by example. They watch everything you do, just as they watch their parents. – grane
Offer to babysit, at your house if possible. Mom and Dad really appreciate a little alone-time to do chores around the house, nap, or whatever! – mfoulkes
Get in shape! I wish someone had warned me! Amazing what tiny ones can do to an untoned body. And guess what? They keep getting bigger and heavier. Start working those arms, abdomen, back and leg muscles! You'll need to be in shape for hugging, cuddling, carrying, and long walks.
– gillysgma
Don't compete with the other grandparents. Find something that is uniquely you and make yourself know for that. – writingmomma
Watch the way you spend your money. – nanny09
Be a Team Player
Being a good grandparent takes some restraint
The nicer and more respectful you are to the parents, the more time you get to spend with your grandchildren! – MomMomMaggie
Don't feel left out when your grandchild's other Granny seems to spend more time with the kids. It is only natural for a daughter to be closer to her mom and still love you, too! – nanasully
Trust your son or daughter to care for their child. Remember, things have changed since we were parents of small children. – ccaplis
Showing that you respect your children's parental skills really paves the road for lots of grandparent joys. – MomMom02
Just relax and enjoy your role. Don't try to take over! – mrsrev
Don't favor one child over any other.
Love them all unconditionally.
– AnitaR
Don't go against the parents and their belief system. Just go with the flow. – lledra
Twins, Triplets,
Quadruplets
... Oh, my!
Multiple birth rates are much higher today than they were only a few decades ago. If your family is welcoming a set of grandbabies into the fold, here are some things you should know.
According to the Centers for Disease Control and Prevention, the birth rate of twins increased by more than 70 percent between 1980 and 2004, and the birth rate of triplets and higher-order multiples soared by more than 400 percent between 1980 and 1998.
What to know
Multiples are more likely to be born prematurely. According to the March of Dimes, multiples account for only 3 percent of the births in the nation, but more than 20 percent of admissions to the Neonatal Intensive Care Unit.
They aren't always going to be double (or triple) the fun. Think about how difficult it was to survive the first months with only ONE newborn! Dealing with the demands of two or more infants places a heavy burden on a young family.
