YOUR TIME OF LIFE
INVEST IN YOUR CHILD’S FUTURE THROUGH A
REGISTERED EDUCATION SAVINGS PLAN
November 2014
POST-SECONDARY EDUCATION HAS A
GREAT IMPACT ON YOUR CHILD’S FUTURE
University
High school
vs.
Avg. annual salary
Avg. annual salary
$48,250
$76,000*
*Source: 2013 Statistics Canada
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AVERAGE TUITION COSTS HAVE MORE
THAN TRIPLED SINCE 1990
Canadian average 90/91 = $2,243
Canadian average projected 16/17= $6,842
Canadian average
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
New Brunswick
Nova Scotia
Prince Edward Island
Newfoundland & Labrador
0
2,000
4,000
6,000
Current $
1990/1991
Source: Statistics Canada
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2016/2017
8,000
10,000
HOW WILL YOU PAY FOR YOUR CHILD’S
EDUCATION?
Scholarships?
Student loans?
The lottery?
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PAYING FOR SCHOOL, THE REALITY
• Scholarships: two-thirds of parents believe their
children will be partially funded by
scholarships/awards, when only 31% of students
between ages 18 and 20 actually receive them*
• Student loans: more than 90% of parents expect their
children to get student loans – despite the fact only
50% qualify*
*From the book The Debt-Free Graduate by Murray Baker
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RESPs CAN HELP YOU TO MAXIMIZE MONEY
AVAILABLE FOR YOUR CHILD’S SCHOOLING
RESP facts:
• Lifetime contribution limit $50,000 per beneficiary
• Money inside an RESP grows tax-free until it’s
withdrawn by your children
• Withdrawals are taxed in your child’s hands, not yours
• The Government of Canada offers “free money” to help
you save through the Canada Education Savings Grant
and other government programs
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CANADA EDUCATION SAVINGS GRANT (CESG)
• Basic grant of 20% on the first $2,500
contributed into an RESP each year
for a total of $500 per year
• Basic lifetime maximum of $7,200
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GROW YOUR RESP FASTER WITH THE CESG
Investment of $150 a month for 18 years
(CESG = $360/year)
$80,000
$75,734
RESP Balance
RESP Contributions + Growth
$63,494
CESG + Growth
$60,000
RESP Total
$40,000
$20,000
$12,239
$0
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Year
The graph above assumes an annual compound growth rate of 7% and that the CESG is paid as a lump sum to the
account an the end of each contribution year. This illustration is not intended to reflect future value of any mutual fund
or returns on investment in any mutual fund.
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ADDITIONAL EDUCATION ASSISTANCE
Provincial:
•
Quebec – provincial grant equal to half of CESG
•
Saskatchewan Advantage Grant for Education Savings (SAGES)
– 10% matching grant up to $250 per year or $4,500 lifetime per
beneficiary.
For modest-income families:
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•
Additional CESG – qualifying families can receive up to $600 per
year (up to $100 more than basic amount of $500)
•
Canada Learning Bond – families receiving National Child Benefit
Supplement. An initial CLB grant of $500 for children born Jan. 1,
2004 or later, and $100 per year of eligibility until the child is 15
TOP 5 RESP TIPS
Talk to your financial advisor about whether an
individual or family RESP is more appropriate
Take advantage of carry-forward CESGs
Don’t withdraw your contributions from an RESP
Consolidate your RESPs
Have a back-up plan in case your child does not
attend university or college
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RESOURCES TO HELP
Ask your advisor for
these helpful guides.
Or visit mackenzieinvestments.com/resp
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START CONTRIBUTING NOW
• Start by getting a Social Insurance Number for your
child
• Apply for the CESG by simply filling out the CESG
application form
• Parents, grandparents, relatives and friends can
contribute
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HOW MUCH MONEY CAN I SET ASIDE
FOR MY CHILD?
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RAISING FINANCIALLY LITERATE TEENS
This program can help
you teach positive money
habits to your kids
Ask your advisor for a kit.
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DISCLAIMER
Commissions, trailing commissions, management
fees and expenses all may be associated with
mutual funds. Please read the prospectus before
investing. Mutual funds are not guaranteed, their
values change frequently and past performance may
not be repeated.
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