Help save for your grandkids’ educations

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Kids tend to come along around the same time a family takes on its first mortgage.

This means a lot of parents are strapped for funds when it’s time to start saving for their children’s future educations.

Sure, there are those parents who open a Registered Education Savings Plan (RESP) the day after they get their child’s social insurance number. But they’re rare.

So, instead of helping your adult children out with basic spending necessities, consider giving a gift that will truly give back to them later in life by helping them fund your grandchildren’s educations.

There are dozens of approaches to helping out.

One of the most effective is helping contribute to an RESP opened by the parents. When parents put money into an RESP, Ottawa kicks in an Education Savings Grant (ESG) – 20 cents on every dollar to a maximum of $500 for parents who contribute $2,500.

A financial planner will likely tell you that helping top up these RESPs is a great first step, because it ensures your grandchildren get the maximum available ESG every year (it’s only available up to the year a child turns 17).

Other ways to help include setting up a non-registered investment account, a Tax-Free Savings Account (TFSA) or even a simple savings plan that you earmark for their educations.

Canadian tax rules are generous about gift allowances, but ensure your returns are well reviewed by a tax specialist – particularly if children attend school in the U.S. or Europe, where costs can be significantly higher.

It’s also important to balance the desire to help with a realistic view of your own finances. Parents and grandparents naturally want to do all they can for future generations, but be careful about making spending decisions that will harm your own quality of life.


CPP Investment Board, Investing Today for Your Tomorrow.

The content on this site is provided for information purposes only. CPPIB is not a financial advisor, and the content on this site does not provide financial advice. Every person’s financial planning needs are different. For advice on how you should prepare financially for retirement, please consult a credentialed professional financial advisor.

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