Money For Children and Grandchildren

Older Americans give a lot of money to their children and grandchildren—enough to "be considered a major expenditure category," according to an Employee Benefit Research Institute study. In the study, EBRI researcher Sudipto Banerjee examines cash transfers made by older householders to children and grandchildren during their lifetime rather than after death.

The data come from the longitudinal Health and Retirement Study, which tracks a representative sample of householders aged 50 or older. Cash transfers are defined as "giving money, helping pay bills, or covering specific types of costs such as those for medical care or insurance, schooling, down payment for a home, rent, etc. The financial help can be considered support, a gift or a loan." The results...

• Many provide financial help. The 51 percent majority of householders aged 50 to 64 in 2010 had transferred cash to children or grandchildren during the past two years. Although the share of older householders who did so declined with advancing age, even among those aged 85 or older a substantial 28 percent had transferred cash.  
• Thousands of dollars are provided. The average cash transfer ranged from a low of $4,787 for householders aged 85-plus to a high of $8,350 for 50-to-64-year-olds.
• The affluent give more. Among 50-to-64-year-olds, the percentage who gave ranged from a low of 31 percent for those in the lowest income quartile (average amount provided = $7,419) to a high of 70 percent for those in the highest income quartile (average amount provided = $27,378).

"Transfers are actually a significant expense when compared with other items in a household budget," concludes Banerjee, "though they are not traditionally thought of as a budget item." The report examines trends in cash transfers from 1998 to 2010 and also looks at the much less common transfer of cash from younger to older family members.

Source: Employee Benefit Research Institute, Intra-Family Cash Transfers in Older American Households