By: Mark McCrindle
Grandparents, from all walks of life, play an important role in their grandchildren’s lives.
New research commissioned by Futurity Investment Group (from a survey of 1,000 Australian grandparents with grandchildren in education), presents new insights on how grandparents are contributing to their grandchildren’s lives and their educational aspirations.
Grandparents defined
Not all grandparents in Australia are in their elderly years, with one in four grandparents (26%) being 58 or younger. Just over half (54%) of grandparents are part of a couple household without dependent children. As such, 46% have home dynamics outside of the assumed home life for grandparents. The home(s) of their grandchildren are also more diverse and unique than the conventional nuclear family. One in five (19%) grandparents have grandchildren in a blended household consisting of a single-parent or couple-parent household with children living in multiple households and/or step or half children. One in six grandparents (16%) have grandchildren in a single-parent family, and 6% have grandchildren living in a multi-generational household.
Grandparents, no matter their home life, age or stage of life, place significant importance on building strong relationships with their grandchildren. For 79% of grandparents, spending quality time with grandchildren is a top priority. Grandparents are motivated to be involved with their grandchildren’s lives by the importance they place on family, the love they have for their grandchildren and a desire to share life experiences and teach them important life values.
Considering the fundamental motivations, it is unsurprising that nearly a third of grandparents (32%) spend more than five hours a week with their grandchildren on average. Interestingly, it is not retirees or pensioners who are more likely to spend extensive time with their grandchildren. Working or semi-retired grandparents are more likely to spend three or more hours per week with their grandchildren than their retired counterparts (65% compared to 46%).
Grandparents are aware of the future financial challenges for their grandchildren
The three most pressing concerns that grandparents have for their grandchildren relate to their grandchildren’s financial and economic future. Specifically, the rising cost of living (77%), the rising cost of housing (72%) and the potential for economic downturn (42%) are top-of-mind concerns for most Australian grandparents. Beyond economic challenges, some of the primary concerns for their grandchildren relate to social issues, such as changing social values (41%), increasing mental health and wellbeing challenges (41%) and the negative impact of technology on daily life (41%).
Not only are a majority of grandparents concerned about the broader financial and economic conditions their grandchildren will grow up to experience, but many are also concerned about the cost of education and, for those who do contribute, the sustainability of their financial support. Specifically, three in four grandparents (76%) agree that the cost of education is becoming increasingly difficult to accommodate.
The cost of education
Parents today are having to make significant financial contributions for even the most affordable of the three sectors, with the average cost of government education over 13 years of schooling being $84,554. Catholic education is just over double the average total cost of government education at $173,706 for 13 years of schooling.
Independent schools, on the other hand, increase by a significant margin to an average estimated cost of $288,880 across 13 years of schooling. While noting there are a variety of options across the three schooling sectors, including many quality lower-cost Catholic and Independent schools, the average figures reveal the challenge that awaits many parents in the future.
Grandparents contribute $2,000 in education expenses per grandchild each year
Grandparents are committed and involved in preparing their grandchildren for the future, through education. Three in four grandparents (76%) agree they are personally invested in their grandchildren getting the education they need to succeed in the future.
Among financially contributing grandparents, the combined average monetary value of their contribution is $1,998 per grandchild, each year.
A significant proportion of grandparents (65%) who contribute financially to their grandchildren’s education are using their personal savings. A third (33%) are using income from employment, and more than one in five grandparents (23%) are using their pension payments to make financial contributions. Grandparents primarily provide financial support when there is a specific need or opportunity, with four in five grandparents (78%) choosing to provide their financial support on an ‘at-need’ basis.
Among those who do provide financial support for their grandchildren’s education, 41% are supporting only one grandchild, 34% are supporting two and 13% are providing financial support for three grandchildren. The remaining 12% are providing financial support for four or more grandchildren.
Future wealth transfer
The majority of grandparents (71%) intend to transfer a proportion of their wealth directly to their grandchildren. More specifically, a third of grandparents (32%) plan to allocate 50% or more of their wealth to their grandchildren, with 10% intending to transfer their entire wealth to their grandchildren.
The most common motivators among grandparents to transfer their wealth to their children and/or grandchildren is a desire to set up them for the future (55%), followed by not wanting them to lack financially (46%) and altruistically wanting to give back to their children or grandchildren (42%). These three most common motivators reflect a sense of responsibility and care for grandparents’ descendants.
Over half of grandparents (56%) hope their children and/or grandchildren will use their inherited wealth to help purchase a property. Importantly, education (35%) is the second most common area grandparents hope their children or grandchildren will use their inheritance. The opportunity this wealth transfer has in making a meaningful difference in a household’s finances is not to be understated. For two in five Australian parents (39%), the experience of paying for their child(ren)’s school fees or voluntary contribution significantly or moderately negatively impacts their household finances.
Article supplied with thanks to McCrindle.
About the Author: McCrindle are a team of researchers and communications specialists who discover insights, and tell the story of Australians – what we do, and who we are.
Feature image: Photo by Ekaterina Shakharova on Unsplash