SmartMoney Blogs

A blog about living in and planning for retirement

Best Financial Gifts for the Grandkids


Sure, grandchildren probably want the latest X-Box game or a brand-new iPad, but they probably don’t need yet another toy.

Instead, grandparents might consider giving them a financial gift like an IRA or college savings plan that will keep on giving, says Carrie Braxdale, managing director of investor services for TD Ameritrade.  “These may not be top of their wish list now, but in years to come, these will be at the top of their thank you lists,” says Braxdale.

Here are two financial gifts to consider:

529 College Savings Plans: Considering that college tuition costs rise at an annual rate of between 6 and 9%, this can be one of the most compelling financial gifts for the grandkids.  It also has several benefits for the giver, says Braxdale. “There’s a good amount of flexibility from the contribution perspective,” she says. You can put in $13,000 per year (before you have to pay the gift tax).  “There is also value from an estate tax perspective,” she says. “The value of the account is removed from your taxable estate.”  For further details on 529 plans, click here.

IRAs: Traditional pensions may soon be virtually a thing of the past and kids are having a hard time finding jobs — these are just some of the reasons it’s more valuable than ever to give the gift of an IRA, experts say. Plus, “The sooner you start, the more you get those compounded benefits,” Braxdale says.  Up to $5,000 per year can be contributed into these IRAs. Talk to a financial advisor about how to open a minor IRA.

Finally, while this isn’t a gift per se, it’s important to help grandchildren learn how to manage money effectively, says Braxdale.  “Financial education is hugely important especially in conditions like this where there’s a lot of volatility.” There are a number of free online education tools (see Disney’s new “Piggy Bank” tools here or the myriad tools from The Mint here). Or, for those wanting to get the kids that iPad anyway, why not preload it with some financial games and resources.


We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 8)

View all Comments »
    • You happen to become pleasant, Doug. Give thanks to for your kind words and phrases.

    • I would state, numerous of this became just a bit around my mind, but on the complete, my partner and i loved searching at your post

    • Happy 2012 New year,Merry Christmas ,Christmas top gift


    • I wish there was a way to open an account for them that they couldn’t touch until their 60th birthday.

      The only thing I know of that’s close is to establish a trust. Too complicated, probably too expensive. Wish Vanguard or another respected company could make this happen. Can see a lot of benefits to both the economy and our grandchildren if it were possible.

    • Give them gold and a passport. Will be the only thing with any value 20 years from now

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.