Get the facts on RESPs

Many parents today have RESPs for their children, but don’t completely understand what they are and how they work. We can help make sense of this smart, tax-deferred savings strategy and help you optimize the power of an RESP for your child’s future.

What exactly is an RESP?

Very simply, a Registered Education Savings Plan (RESP) is an investment vehicle that allows contributors such as parents, grandparents, friends and other relatives, to save for a beneficiary’s (usually a child’s) post-secondary education. Up to $50,000 in contributions can be made towards a child’s RESP (before grants and income). Over time, your RESP should generate income that will be available the day your child is ready to start his or her post-secondary education.

Did you know it could cost $150,000 to send your child to university by 2030?

How does an RESP benefit you and your child?

Here are some smart reasons for opening an RESP for your child:

Tax-deferred growth - Any income and capital growth within an RESP is untaxed until it's withdrawn

Grant money - Having an RESP entitles your child to $7,200 or more in federal and provincial government grants once you open an RESP

Three different types of RESP grants with explanations of what they are.

The story is in the numbers. More than ever, a post-secondary education is critical to your child's future success. But at the same time, the cost of education is dramatically on the rise, so maximize your child's RESP.

RESP FACT: In 2011, Canadians held $31.6 billion in their RESPs.2

RESP FACT: $1.6 million more: what graduates with a Bachelor's degree will earn over their lifetime compared to high school graduates3

RESP FACT: 2 out of 3 new jobs: require a post-secondary education4

Source:  CST Consultants Inc.:

1 Projected tuition costs of a 4 year university program are based on the annual average cost of tuition across Canada for the previous school year and an assumed average annual increase of 4.5%. Room and board are based on typical cost for residence with an average annual increase of 3%. Projection includes the cost of entertainment; transportation and books adjusted using an annual inflation rate of 2%. Source: Statistics Canada 2012 and university websites.

2 Human Resources Development Canada Annual Statistical Review, 2011

3 Association of Universities and Colleges of Canada (AUCC), based on Statistics Canada Labour force survey; average annual earnings, 2011.

4 Looking Ahead: A 10 Year Outlook for the Canadian Labour Market 2006 - 2015, Human Resources and Social Development Canada.

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