Exclusive new research has revealed three in four (76%) grandparents are heavily invested in their grandchildren getting the education they need to succeed in the future.
However, Futurity Investment Group’s Grandparents’ contribution to education report found less than a third (29%) of grandparents financially support their grandchildren’s education, with those that do, contributing $1,998 per grandchild each year.
The nationwide survey of 1,000 Australian grandparents with grandchildren currently in formal education found 65% of grandparents who contribute financially to their grandchildren’s education are using their personal savings.
A third (33%) are using income from employment to fund their financial contributions, while a quarter (23%) are using pension payments.
The report found 77% of grandparents are concerned about rising cost of living expenses for their grandchildren, 72% are worried about the rising cost of housing, with more than a third (38%) concerned the current quality of education will not equip their grandchildren with the necessary skills to succeed in the future.
Seven in ten retirees and pensioners (72%) intend to pass on at least 40% of their wealth to their grandchildren. In contrast, grandparents who are still employed or are semi-retired (36%) are more likely to pass on 50-90% of their wealth to their grandchildren.
The research also revealed the top motivators for the transfer of wealth are a desire to set up their children or grandchildren for the future (55%), not wanting them to lack financially (46%) and altruistically, wanting to give back to their children or grandchildren (42%).
More than half of all grandparents (56%) hope their children and/or grandchildren will use their inherited wealth to help purchase a property. A third (35%) hope it is used to fund education, while a quarter (23%) want the money spent on travel and life experiences.
The research found most grandparents (69%) are active supporters and involved in their grandchildren’s education.
The most common form of involvement is homework support (53%), buying school supplies (40%) and providing a space to study (28%).
Futurity Investment Group Executive, Kate Hill, said there is a disconnect between intent and reality in relation to grandparents transferring their wealth.
“Baby Boomers make up 21% of the population but control almost half of Australia’s wealth,” Ms Hill said.
“Despite having healthy bank balances, many grandparents are still saving for a rainy day. However, there is a solution for grandparents who want to maintain control of their wealth, while providing a leg-up for their children and grandchildren.
“Futurity’s range of Education Bonds allow parents and grandparents to tax-effectively save and invest for the education needs of their children and grandchildren, while maintaining access to their capital at any time.”
Futurity leads the way in helping cover education expenses. Education Bonds offer a unique Education Tax Benefit which amounts to an additional $30 for every $70 withdrawn from the Bond’s earnings and it offers a range of tax-free avenues.
Ms Hill said grandparents are helping many families who are already stretched by the spiralling cost of living, afford education.
“With less discretionary money to spend, it’s a challenge for many families to pay for education, unless they receive financial support from grandparents,” Ms Hill said.
“For the first time, we’ve been able to measure how much grandparents are financially supporting their grandchildren’s education.
“A $2,000 contribution from a grandparent equates to 25% of the total cost of a government education for one student annually.
“These contributions are being used to pay for school fees, outside tuition, software and electronic devices, uniforms, transport, sports equipment and musical instruments.”
Ms Hill said with education demanding a far greater share of the family budget than in the past, parents and grandparents who have planned and saved for education will be in a better position in the long run and will be able to explore and afford choice when it comes to their children’s and grandchildren’s education.
The Grandparents’ contribution to education report, commissioned by Futurity Investment Group and conducted by McCrindle, is the collation of quantitative data gained through an online survey of 1,000 Australian grandparents with grandchildren currently in formal education. The survey took place from the 6-14 June 2023.
Download the report here.
