The gift that keeps on giving: RESPs can solve last-minute shopping challenges for grandparents, says RBC
TORONTO, Dec. 23, 2013 /CNW/ - If you are still looking for the perfect present for grandchildren who have all the toys their closets can hold, the gift of higher education can be the ideal "extra" under the tree, according to RBC.
"Tucking even a small amount of money into an RESP (Registered Education Savings Plan) for a grandchild this holiday season or on other special occasions can truly become the gift that keeps on giving," advised Janet Brick, manager of RESP initiatives at RBC. "Your grandchild can benefit in two ways: your gift of course, plus government funding, such as the Canada Education Savings Grant, which helps an RESP grow even faster."
An RBC poll earlier this year showed that, while two-thirds (63 per cent) of young families (those with children who are 12 years old or younger) have RESPs, fully one quarter (25 per cent) of these families are contributing $200 or less a year to their RESPs, due to other financial commitments.
"We know that parents with young families are trying to cope with a number of competing financial demands and RESPs are just one more way they are trying to do what is right for their children," added Brick. "Gifts from other family members and friends can help parents take better advantage of grants to maximize their RESPs for their children to use for their post-secondary education."
RBC 2013 RESP Poll Fast Facts
- Through the Canada Education Savings Grant, the federal government matches 20 per cent of RESP contributions yearly, up to an annual maximum of $500 per child, for a potential total of $7,200 by the time the child reaches the age of 18.
- On average, young Canadian families who have RESPs are contributing just under $1,500 per year to them:
- One quarter (25 per cent) are contributing $200 or less each year
- A further one-in-three (29 percent) contribute up to $1,000 each year
- RESPs are opened, on average, when a child is 2 years old.
- While parents believe that, on average, their RESP will be worth almost $28,500 when needed by their child/ren, typically contributions total only $22,500 by the time a child is 17 (for RESPs started at age 2).
About RBC's financial planning advice, resources and interactive tools
Canadians can access RBC Financial Planning and rbc.com/savingsspot for free planning, budgeting and savings advice and resources, find RESP information or the nearest Investment and Retirement Planner. For Canadians who want to get more from their day-to-day banking, protect what's important, save and invest, borrow with confidence or take care of their businesses, the RBC Advice Centre can help answer their questions. Interactive tools and calculators such as the Debt Reduction Plan and Debt Consolidation Calculator, provide customized information covering many facets of personal finance. All personal RBC online banking clients also can use myFinanceTracker, a no-cost interactive financial management tool, to create a set budget, track their spending habits and access tax-related apps in myTax Centre, to help manage and plan their taxes.
About the RBC 2013 RESP Poll
This poll was conducted via online interviews with a sample of 1,001 young Canadian families (with children who are 12 years old or younger) by Ipsos Reid from May 30 to June 5, 2013 - 628 of those sampled were RESP holders. The results are based on a sample where quota sampling and weighting are employed to balance demographics and ensure that the sample's composition reflects that of the actual Canadian population according to Census data. Quota samples with weighting from the Ipsos online panel provide results that are intended to approximate a probability sample. An unweighted probability sample of this size, with 100 per cent response rate would generate results accurate to within ±3 percentage points 19 times out of 20; for RESP holders, it is ±4 percentage points, 19 times out of 20.