It doesn’t take a crystal ball to predict future trends for 529 plans. All you have to do is look at what grandparents are doing. Recent survey results suggest that many (58%) have the means to pitch in when it comes to college expenses. And they are using the benefit of hindsight to plan ahead and rely on more effective investment products such as 529 plans.
Findings from Legg Mason’s 529 Plans Survey: Knowledge, Attitudes and Legacies point to a generation of grandparents who are playing a larger role mentoring and educating children and grandchildren about finances. Generally 55 and older, this cohort seems intensely focused on helping in a variety of financial and non-financial ways.
Approximately one-third see themselves as financial mentors, hoping to lead by example with their own saving and investing discipline. And 60% are helping financially with everything from clothing (33.4%), vacations (30.3%) and living expenses (15.7%), to medical and dental expenses (6.7%) or a down payment on a house (4.7%).
What inspires grandparents’ generosity?
However, when asked if they might have handled things differently, grandparents conceded to a few missteps. Looking back, many wished they would have:
- Started saving earlier (41.1%)
- Saved more (36.1%)
- Opened a 529 plan (33.7%)
Nearly two-thirds of grandparents worried that their grandchildren will have a much harder time financially than any generation before them. That’s not a big surprise, given that today’s youth face over $1.2 trillion in student debt and tuitions increasing faster than the rate of inflation. As the needs of their grandchildren become more acute, grandparents will likely ensure that pitching in is no passing fancy.
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