Advisors take note: Grandparents are spending approximately $179 billion on their grandkids every year.

While grandparents spend an average of $2,572 annually, many are spending a good deal more on things like tuition assistance and even multi-gen vacations, according to new research from AARP, which found the financial impact that grandparents have on their grandchildrens’ lives is immense.

Today’s grandparents, numbering some 70 million Americans, are an economic force that should not be ignored by the financial services industry, the AARP said. By age 65, 96 percent of Americans are grandparents.

Although most grandparents (79 percent) do not consider themselves a financial supporter, the breadth of expenses they provide for their grandchildren tells a different story, the AARP found.  Nearly all (94 percent) grandparents provide some sort of financial support, helping to ease the costs of raising kids. That said, some are even providing support to their grandchildren at the cost of their own needs. 

Opportunities for the financial services industry to assist grandparents with their goals abound, the AARP said. “Whether they acknowledge it or not, grandparents are contributing significantly to the financial needs of their grandchildren,” the association said.

The fact is grandparents are living longer and as a result, starting to have great-grandchildren, multiplying the opportunities for financial and asset planning. “By 2030, more than 70 percent of all U.S. children 8 years old will have a living great-grandparent. It will become increasingly critical to help grandparents strategize how they can give to their grandchildren while maintaining a safety net for themselves,” the AARP asserted.

First time grandparents are in their prime spending years. The youngest grandparent is about 38 years old, with the average age Americans have their first grandchild being 50. At the same time, four in ten grandparents continue to work, contributing to their strength as a significant market force.

One in five (21 percent) say they contribute financially to their grandchildren's school or college tuition, with the average amount being $4,075 annually. Nearly all (95 percent) say it is important for their grandchildren to get a higher education, the AARP found.

Promoting and providing access to education and all the opportunities that come with it are important legacy markers, grandparents told the group. For many grandparents, access to education is so important they are encouraging and helping to pay for tuition regardless of their own education background, the research uncovered.

Unfortunately, grandparenting can create financial strains for some grandparents, too.

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