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Senior Health: Millionaires and the education of their grandchildren

According to a 2014 Spectrem’s Millionaire Corner wealth level study, thirty-nine percent of senior Millionaires over the age of 65 consider financing their grandchildren’s education one of their primary concerns.

Senior Millionaires
Photo by Martin Hunter/Getty Images

In the past, Millionaire Corner research found that half of seniors surveyed were shouldering all college costs, while 20 percent reported footing more than three-fourths of the expense. The thought of joining a millionaire club for single millionaires or entertaining relationships have been put on back burner to make room for the expense of a grandchild's education.

Almost nine-in-ten factored their grandchildren’s college education into their financial planning. Three-fourths said that paying for their grandchildren’s education was something they had planned to do for a long time and eight-nine percent said that doing so was not a financial burden. Seven-in-ten said they had to cut back in other areas of their budget to pay their grandchild’s educational expenses. Retirement perks like singles cruises for seniors looking to play millionaire matchmaker to the pensioners have been traded in for college tuitions.

Keith Bernhardt, vice president of college planning at Fidelity, in a statement to Donald Liebenson of MillionaireCorner.com said, “Contributions from grandparent—big or small-can add up over time and potentially open up a grandchild’s opportunities when making college decisions.”

He added, “Ongoing communication between parents and grandparents can help when determining how to grow their savings, as well as how to best leverage those savings to pay for college when the time comes"

The Fidelity survey found that grandparents tend to be old fashioned about the value of a college diploma, which is why nearly 72 percent think it is important to help pay for their grandchildren’s college education. Among grandparents surveyed who talk to their adult children about financial planning for their grandchildren’s college education, 59 percent give advice about saving for college at least once a year while about 47 percent of grandparents are including or thinking about including college savings for their grandchildren in their own long-term financial planning or estate plans.

Financial planning is now taking contributing to their grandchild’s college education into account for a majority of grandparents. According to the new Fidelity Investments research, nine-in-ten would be likely, if asked, to make a contribution to their grandchild’s college savings fund in place of other gifts. More than half are saving or plan to start saving to help pay for their grandchildren’s college costs.

The average cost of tuition and fees for the 2013–2014 school year, according to the College Board, was $30,094 at private colleges, $8,893 for state residents at public colleges, and $22,203 for out-of-state residents attending public universities.

Millionaire Corner is published by Spectrem Group, the premier research and consulting firm in the wealth and retirement industry. The Chicago-based Spectrem Group has been studying investors for the past 20 years. Each year, interviews and surveys are conducted in 25,000 to 30,000 households to discern their financial needs and preferences. These findings are distributed in a series of publications to the financial services industries. The Spectrem Millionaire Investor Confidence Index (SMICI) ? and the Spectrem Affluent Investor Confidence Index (SAICI) ® are published monthly and are used by the media and the financial community.