Every August, as children get ready for back-to-school, it puts a lot of things into perspective. One of them is how much I appreciate the grandparents in our lives who, almost every year around this time, ask, “What can we do to help with their education?” It’s a generous question, and I hear a version of it constantly from clients too. Grandparents want to help fund their grandkids’ future, but they don’t always know the best way to do it, or how to make sure it doesn’t put their own retirement at risk.
The Cost of Education Keeps Climbing
College costs have outpaced general inflation for years now, and the gap between in-state and out-of-state tuition, or public and private schools, keeps growing. Room and board can rival tuition itself. Trade schools and certificate programs are a more affordable path for many families, but they still come with real costs. Whatever path a grandchild takes, starting early gives everyone more options later.
529 Plans Are Still One of the Best Tools Available
If you’re a grandparent looking to help, a 529 college savings plan is usually the first thing I recommend if your grandchild plans on going to college. Contributions grow tax-free, and withdrawals for qualified education expenses aren’t taxed either. Washington families have access to the GET prepaid tuition program along with standard 529 investment plans, and you can either contribute to an account the parents already opened or start your own.
Both routes work. Opening your own account gives you more control, and thanks to updated financial aid rules, it no longer creates the reporting headaches it used to. Contributing to an account the parents already manage is simpler and avoids duplicate paperwork. 529 plans also come with a nice estate planning bonus: grandparents can front-load up to five years of annual gift exclusions into one contribution, which moves money out of a taxable estate while giving it more time to grow.
Please Don’t Shortchange Your Own Retirement
Here’s the thing I want every grandparent to hear: generosity toward your grandkids should never come at the cost of your own financial security. I’ve seen well-meaning grandparents get so excited about helping that they lose sight of their own retirement plan. Before committing to a contribution amount, take a real look at your retirement income, your long-term care plan, and your emergency reserves. A financial advisor can help you figure out how much you can comfortably give, and whether things like required minimum distributions might be a smart source for those gifts.
Loop In the Parents
Even the best intentions can cause friction if nobody talks about them ahead of time. Before opening an account or making a big contribution, have a conversation with your grandchild’s parents. Ask what they’ve already set up. Respect how they want to approach college and education decisions, even if it’s different from how you’d do it. A quick conversation now can save a lot of confusion or hurt feelings down the road. I say this as both a financial planner and a parent.
It’s Not Just About the Money
Some of the most valuable things grandparents give have nothing to do with a bank account. Helping with college applications, visiting campuses together, or just being someone your grandkid can call when they’re figuring things out matters more than people realize. Financial support and personal involvement work best together.
Let’s Build a Plan That Works for Everyone
Helping fund your grandchild’s education is a meaningful goal, and it deserves the same thoughtful planning as any other part of your financial life. If you’d like help thinking through education funding alongside your broader retirement and legacy plan, schedule a consultation with our team. We’d love to help you support the next generation without putting your own future on the line.
