Saving for Your Children’s University Education
September 18, 2022
Your children’s university education will be very expensive.
There are several things you can do now that will help cover post-secondary expenses.
A four-year university degree costs can be as high or higher than $100,000. That is expensive and more so depending on the number of children you have. Plus because of inflation, every year costs increase.
It is becoming more popular for students to continue their education after their first degree.
A starting point for most families would be to establish a Registered Education Savings Plan (RESP).
Funds held within a RESP are not taxed. When funds are withdrawn to pay university expenses, the withdraws are in your child’s name who will most likely have a lower tax rate than the parents.
Twenty per cent of an annual contribution up to $2500 are eligible for a government grant of 20 per cent for a total of $500 yearly. The maximum grant is $7200 per child.
A family’s cost to provide financial assistance to their children can be extremely high. Plus, there are other financial implication to consider.
Around the time your children are old enough to attend university, you might start seriously thinking of your own pending and significant future costs: retirement.
Most Canadians don’t have workplace pensions. The cost-of-living keeps rising so retirement will be more expensive. As life expectancies increase, the number of years in retirement increases.
If university is in your family’s future our recommendation is to start a RESP.
Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com