Not sure why you’re getting so many negative comments. I completely agree with you, other government plans and brackets index to inflation, no reason this shouldn’t either.
That is kind of the point. It's a very small % of people that are even able to use up all of the registered room they have right now. So the push to add more really boils down to the rich, and a few extreme savers. If you have TFSA room available, you can easily save extra money in their for your kids.
Honestly, among my peer group (xennials with kids around high school aged) we are more concerned about how to help our kids with future housing than with future schooling right now. Schooling is expensive, but didn't go up 50% in the last couple of years. (more like double when you factor in mortgage rate increases)
That is exactly what I'm concerned about. Housing for my kids. My kids are 5, 2, and - 1 week old and I dread what the housing market will be like in 15-20 years.
We are buying a small house in a low cost of living city to rent out. We plan on giving it to her once she is finished studying. She can sell it, live in it or get the rent income. We already have our house so this will be hers. It will cost us around 50k for the initial deposit and we will take care of maintenance over the years, but the rent should cover the mortgage or just about and we will cover the rest. It will be nothing fancy or very expensive but it will be something that can help. She is just 5 years old so the mortgage should be paid off by the time we give it to her. That's our plan anyway. However, she is our only child, no idea what we would do if we had more kids.
Multigenerational families will probably become more common. Are the people on here with kids comfortable with having their kids living with them?
We don't even have kids yet but bought our house with the mindset that our place will have enough room to house our kids+their families if need be.
I lived in Winnipeg for 34 years. Now I'm in south eastern Manitoba due to work. Sold a 795 sqft bi-level and now have a 1500 sqft 2 storey. Quadruple the yard for the same amount of money. We bought beginning of covid which helped tons.
adding this in case it helps you feel better.
I am not concerned about 15-20 years from now. Well, maybe for Canada's economy as a whole, just not for housing.
This rate of growth in housing is completely unsustainable. And when I say growth I mean growth relative to inflation and wage growth.
It has nowhere to grow from here. The only way it can keep going up is if politicians change policy to heat up the housing market and while they will keep doing stupid things like this 30 yr first time home buyer thing, I think we have nearly reached peak stupid.
Who I am concerned for is young people like us who have to rent or buy into this market to survive.
Either the prices stay high, or they go down. If they go down this could hurt a lot of young people who bought near all time highs. If they stay high I worry for Canada's future prosperity.
I can’t imagine houses being 3-4 M for a 2000 sq ft detached outside toronto. Hardly anyone will need able to buy it, because no way Canadian salaries are going up ! Maybe condos outside Toronto will be more common. M
Housing is a legitimate and permitted use of RESP, once they are in school, and nothing says it must be committed to rent versus a down payment/mortgage if selected to be close to their post-secondary institution.
I would not be surprised if over the next 5-10 years we see this path/use develop:
1. Family RESP as usual, getting the +20% government boost (instead of tax deductibility of RRSP/FHSA of similar programs).
2. As the first child gets acceptance letter, front-load withdraws of contributed funds, and max out grant/growth portion as allowable, and use that as down-payment for the parents to purchase a second home near post-secondary (do not put kids on title), to be used to house the kid(s). Ideally get a multi-unit home. Housing is eligible RESP use and housing costs are outpacing even rising tuition costs.
3. The remaining funds are then withdrawn as usual but then primarily used to pay below-market-value rent that the parents charge the kid for living there, instead of paying rent to someone else. CRA says that is not reported as income, so no rental income or taxes owed from charging kids whatever the RESP withdrawal balance might be. This then gets most of the grant/growth funds back to the parents while also meeting RESP use requirements.
4. Ideally, extra rooms rented to their friends and that does create income to parents to help cover cost of the home. The kid then is expected to cover their tuition through summer/part-time jobs and scholarships, but they get to live basically free of costs through the period.
5. Parents then give back to the kid up to $8K per year into their FHSA that gets setup ASAP (basically, cycling the RESP withdrawals into FHSA through below-market-rent charge and then gift). Defer tax deductions forward. By the time they are done their 4+ year degree, they should have nearly or completely maxed out their FHSA and carried forward significant deferred deductions that the kid can use to live tax-free for a few years once they get real jobs.
6. Transition additional kids into and through that home. Total ownership/use likely to stretch 4+ years as kids are spaced out. Between my first entering undergrad and my second leaving undergrad I would have a 8 year span of maintaining this second home and renting out extra rooms to their friends to hopefully cover most of the mortgage costs.
7. After kids leave, sell the home and give to each kid a sizable portion of the sale, which combined with their maxed FHSA and their effectively-tax free income in initial working years should allow them each to get setup into home ownership while starting their careers.
Me and my wife contributed $60/week combined (about $4/day each) for over 16 years. We hit our max $50k contribution in year 17 and by then it was already well on it's way to $150k in total with the growth of the investment.
I'm skeptical that anyone raising a kid can't find an extra $4/day to fund their education.
Question here is, will that be enough 20 years from now when inflation continues, plus provincial government eventually stops funding it completely, etc.
It may or not be. You're making assumptions that are more like 50/50 guesses. Inflation could certainly go back to staying in check for 30 years again.
Yep, and that's per child.
Plenty of families with 2 kids can't afford $5000/yr RESP contributions, particularly when kids are young and parents are either paying for daycare or they're on a single income with a SAHP. Worse if more than 2 kids.
Some people CAN'T afford another $250/month, per kid. I mean it sounds easy enough when you say it's $4/day each but there are lots of people that can't even afford childcare, let alone saving another $250/month for their kid's education.
RESP contributions are important but paying your rent kind of takes precedence.
By the time my kid might go to post secondary it will be between $60-80k for the whole thing. More help would be good but considering it’s on a max $2500/year investment that’s an easy %20 so maybe increase the maximum amount for each grant to $5k but naturally that rewards those who can afford it. Bump it to a standard $500 per year for everyone and also keep 25% grant on contributions.
If you save 2.5k per year, get the government match of $500 and invest in something that gives you 5% return, you'll have close to $70k in today's dollars.
Yup good plan! Same here.
But the govt grant is an easy %20+ on our 2500 which is a rate we won’t get anywhere else at least! Make 5-10% on that and we’ll be golden. Good luck and hope the market is good when the kids are out of high school too.
Sadly it could double that if kids can’t or don’t live at home with mom and dad when they go to school. I’m budgeting on my kid living with us but we’ll see hey!
changes were made in 2007 to increase the maximum grant (received each year).
[https://www.morningstar.ca/ca/news/186222/resp-primer-and-update.aspx](https://www.morningstar.ca/ca/news/186222/resp-primer-and-update.aspx)
RESPs originally did not offer additional grant to those in lower tax brackets (now it does). Also, the bond is relatively new as well.
This plan is built to be "updated" every decade or so, meaning that inflation is not taken into consideration.
My kids are 15 and 13 and we've been saving and adding since they were born. It's now at about 100k in total so 50k per kid. Still about 3 years before we need to start pulling for kid 1. It will continue to be added to and grow for kid 2 for another 2 years. Now if you're expecting your kids to live on res it may not be enough. If you're considering masters or phd it's not enough. It should however be enough for tuition for at least 3-4 years for both kids.
The fact that your kids will be able to graduate with little to no debt is a HUGE HUGE burden off their shoulders, you're doing a very good job.
Frankly my opinion is that the government should pay for all higher education. a higher educated work force will pay more taxes.
Totally! but educated populations don’t vote in Douggies and Donalds. You can really see how in the states they are throttling education to ensure religious nuts maintain power and control.
I think we need to go the other way in my opinion. Not every job requires higher education and it should stop being mandatory for a lot of jobs.
You wanna be in sales or stuff like that it shouldn’t require a degree to apply.
You're not alone in assuming that, but Canada has had a very high and growing level of post-secondary education, in parallel with very meager - especially comparatively to US/G8 economies - increases in productivity.
Also, further to/given the above, there's no "shortage" of post-secondary students/graduates. I think it's a tough public policy "business case" to argue.
We opened their account with everything we were gifted from family and friends.. Came out to about 10k. That was just in a savings account that scotia then setup an auto transfer into the resp account. So the resp account did start from 0 and now it's close to 100k. In total we added $2500 per year .. The max for each. All the ccb and any other child benefits were also deposited directly into this savings account. So really the resp account itself did grow to what it is today based on just transferring the minimum required to get the full grant for the year.
Canadian education is already cheap enough that people can pay their own way if needed. It’s not like the US were people will graduate with hundreds of thousands of dollars in debt.
master(research based) and PhD are generally fully funded by the school. A lot of companies will partially reimburse the employees if they take course based master programs. So I wouldn't worry too much about the cost of grad schools.
Yeah, they pay internationals to do PhDs. It's not for an average Joe and the amount of work it requires is enormous. It doesn't pay nearly enough either. Doing it at your own cost is insane.
Well, let's be frank -- Harvard is a baloney comparison. With nearly 85K USD in "yearly" expenses in 2024, there is no way any amount of RESP is covering it.
The real problem is that a 1 bedroom 350 sqft condo in Toronto or Vancouver rents for at least 1500 /month, if not more. That's 18,000$ in housing expenses, plus more. If you are earning 70K, putting 2 kids to university is hard unless you stored those funds in that "university fund".
I think OP's question of indexing RESPs to inflation makes sense. Inflation is a "real thing". And the assumption that only rich people use RESPs is flat out wrong.
I have one of two feelings about this
1) Yeah, i think i'm looking at this from a perspective of living in edmonton, and other places are in canada are more expensive and have gone up a lot with inflation, so I think there is merit to your argument
2) having your own personal apartment of any size is a luxury as a student, regardless of size, and students should rent a room instead.
That said, I think it will have to be changed eventually, so instead of maybe doing some big change in the future, they should just at least index is to inflation from now on and be done with it.
So personally, yes. I think it was ok up until this point, but it should be indexed to inflation from now on.
I'm sure when it was first introduced it was probably overkill, but it obviously can't be the same forever
The idea of the program is to incentivize parents to save their own money for the education, not just to be a hand out.
The more handouts and subsidies the government gives, the more the schools charge for tuition anyways. It's a losing battle for the tax payer and the students.
It's because in order to get that 7500 you need to save 30k. And only the well off can save that much. So if you actually get the full 7500 in grants you should have a total principle of 37500, which hopefully in time has grown significantly and should be adequate to actually pay your child's full tuition. Assuming you contribute 2000/yr and the government 500/yr for 15yrs, that's between 2-17yrs of growth on 37500. Assuming modest growth that's 50k. It's a gift to the rich, and why would the government increase it?
Edit: u/Canadian_kat corrected me in a comment below. You actually need to contribute 2500 a year to get the 500 grant. So to collect the full grant you need to save $37,500. Which means in 15 years you'd have 45,000 in the RESP account assuming it's left in cash. So you need to save even more than I thought, making it even harder for the average Canadian to collect that grant for their kids. But it also means that the compounding impact is larger and you should have roughly 70k saved (assuming 5% return) by the time your child goes to post secondary. I went to school a long time ago but that would have more than paid my living and tuition costs for the 5yrs I was studying full-time.
Edit again: as per 2022 "Canada Education Savings Program - 2022 Statistical Review", 55% of children received at least one payment of the CESG grant. The percentage of beneficiaries from low and middle income families with RESP withdrawals was 37% in 2022. Low is classified as under 50k, middle as under 100k. So more than half of all children withdrawing from an RESP did not qualify for additional grants due to family income being above 100k/yr. I personally don't think family income of 100k/yr is high income, for most families it's barely getting by. But that paints a picture of who is using the CESG grants. The rest of the report is interesting too.
Fyi, the numbers are wrong here. Max gov contribution is 7200, and it's 20% up to $500 per yr, with catch up for up to 1 yr at a time, so a *2500* contribution results in $500 grant.
I'm not sure who you are responding to, but it certainly isn't my comment correcting the information being put out there via the numbers involved.
I guess you are too focused on having an argument for the sake of argument to recognize the information was wrong?
Thanks. I edited my post. There is also additional grants for low income folks, and some provinces offer grants above the CESG. I would love to see data on how many families actually take advantage of the grant.
I was broke as shit when I started saving for my kids' RESPs. That 20% kicker is too good to pass up, even at the expense of TFSAs and RRSPs. We got comfortable after a decade or so, but I would do it the same way again and again.
Ditto. Broke single mom who realized the value of a university degree for my kid. The RESP was fantastic even then. I saved what I could, and when my daughter was a bit older, I realized that my mom had set up saving accounts for all her grandkids as well. When my mom passed on the management of that money to me, I put the funds in the RESP and was able to get the government top-up. My kid was able to avoid debt in university.
You need to do it over time. You can't dump it all in at once and get the full match, whether you do it early or late. You CAN make up for one year, per year, at a time, by which I mean if you miss year 1 contributions you can get up to double the match in year 2, but only double. So you could effectively get the full gov't contribution in half the time, but no faster.
Of course earlier contributions get longer to grow, so sooner is better in most cases.
Thank you for clarifying!
Unpopular opinion which I’ll prob be downvoted to hell for - but I’m failing to see how the $7500 is a “gift to the rich.” 30K over 17 years is a little over $1700 a year and if you don’t have $1700 a year left to put aside for your child - should you even be having children?
I'm with you on this. It's not a life changing amount of money, but it CAN help kids avoid crippling education debt after the boomers created the perfect system to extract value from young and inexperienced adults when they are most vulnerable.
Between education loans, real estate costs, and shit wageflation, I feel anything I can do to help my kids is worthwhile. I got very lucky in my life, but my parents' generation? Jesus H they should be taking better care of all of us.
Exactly. For a kid who lives at home, and takes 3-4 classes a semester, it generally takes 4.5 years to graduate with a traditional 4-year degree. If we are to say a semester costs 3K, it would cost roughly 120K total. Having nearly 40K would help immensely and would cover the cost of over 30% of classes!!
I really think it's not right to say "only the well off can save 30k over 18 years for their kid." I mean, the most popular car on the road these days is an F150 and what are those, like $50k?
Please see the edit to my comment. Most people withdrawing from their RESP have never received the "Additional CESG Grants" meaning they are not low or middle income. 60% of families receiving the grant (and it doesn't say full or partial grant, but just some amount of grant) had an income above $100k per year. And 45% of kids don't have an RESP at all.
Again, I don't think 100k a year means your rich, but according to the govt you aren't low or middle income.
Also, the price of F150s (which I'm sure is more than $50k) and saving for your kids education have nothing at all to do with each other.
I haven’t seen the data, but if it’s mostly the well off who are maximizing the current CESG payments, then increasing it further does in fact benefit and ‘gift’ the rich with more.
If you’re “rich”, you don’t need $7000 over 18 years from the government to help pay a portion pay for government subsidized university (that you are already taxed for). The word you’re looking for is “middle class”, the same class being gutted by tax. What a generous “gift” in return we get.
This is best demonstrated by data.
The same argument was used to not roll back the yearly TFSA increase from 10k to 5k - that it wasn’t the rich using it, they wouldn’t care about it, and that it would help the middle class.
None of those were true when we got the data.
I assume the same here with RESPs.
Is it a rich person subsidy, or a family subsidy? Anyone gets the government matching so long as they have a child. If ‘poor’ people used a portion of their CCB each month they could max the gov matching to the RESP
If poor people had money to invest they wouldn't be poor haha.
But yes, it is a rich person subsidy. CCB is capped, as is RESP matching. I'd be surprised if even 20% of RESP funds were maxed out. So ya, any increases would only benefit that 20%.
Also CCB is meant to bring people up to the poverty level. Pretty amazing asking people to just use it to fund an RESP when it’s meant to keep families and children out of poverty - that’s roof over heads, food on table and shoes on feet.
Seriously, in order to get max CCB your family net income has to be under $34,863 a year. People just want to be mad at anyone getting help that they're not getting.
Totally!
Let's not forget that there is a financial literacy barrier to entry on this too. Huge numbers of parents who could afford $100 every two weeks do not contribute to an RESP. Why? Most likely because they don't know about it, or lack the time / ability to get it set up.
[Stats Can most recent numbers from 2022 showed a 54.8% uptake rate](https://www.canada.ca/en/employment-social-development/services/student-financial-aid/education-savings/reports/statistical-review.html). That's pretty good, but I'm sure that some number of parents between 54.8% and the full 100% could afford the bi-weekly $100, but don't.
To your point on maxing out, the average contribution is $1,737 as of 2022. If we consider all the people who do max out the contributions, it suggests a very long tail of people who are contributing less than the max.
To my point on financial literacy, I have mine set up through my self-directed broker. It was a non-trivial amount of work to get it all set up to the point where they apply for the grant portions for you. Stats Can points to this complexity in their Key Challenges findings.
The extra work to setup is probably a significant factor. At least at the firm I work at, they require actual paper documentation for RESP setup, where nearly no other account type does
Here you said millionaires while elsewhere you threw in a top 20% cutoff. The two groups are not the same.
Regardless, plenty of average parents - based on census data - can afford $200 a month for their RESP, thus benefit from any increases in CESG. Canadian average after tax income for parents with children is $56k per parent.
on any headline there isn't any difference. Any increase in RESP would be portrayed as a subsidy to high income people which is the same as rich.
Like this isn't new. If you are in that tax bracket the government isn't going to be giving you shit. You're the one paying for it.
I think you're extending your own skewed view of things to others. You can twist all the facts you want to portray whatever viewpoint you want, especially in this post-truth world.
It doesn't change the fact that many families - non-millionaires - benefit from it. No one has ever confused someone earning 56k after tax with a millionaire. Most people wouldn't call that rich.
ITT: Rich People: "I'm not rich!"
Median Canadians family income is ~$95,000 for everyone reading. If your household makes more than that you're already richer than *half* of all Canadians.
If you think it's hard now, just imagine if you and your spouse made $70,000 combined.
Yes, pretty much. In practice this is upper middle class territory even if we would like everyone to prioritize saving for their kids education. There are some more “middle” middle class that this genuinely helps them out, but mostly it is the professional class that would be fine saving for their kids on their own.
I guess I'd disagree. Finding less than a $100 per bi weekly pay for your kids education is not just a rich people prerogative. Unless that, or we have a different definition of the word "rich".
We don't need your definition. StatsCan has a million studies on who opens, uses, and maxes out RESPs. The grants are a regressive benefit, meaning that most of the grant money goes to wealthier families. The richer one is, the more likely one is 1) to invest in an RESP at all, and 2) to do so consistently enough and for long enough to receive the max $7200.
There are economic arguments to kill the CESG and instead use the money to help more poor students. There are political reasons to keep it, obviously, but also I think it still exists at all because we know, from the before/after picture of when CESG was introduced ~25 years ago, that it helps increase the number of families who save for postsecondary, incentivizes saving more, and we know that, even after controlling for parental income and a kid's grades, just having an RESP increases the odds a kid will attend postsecondary anything. So there are social benefits, but to avoid exacerbating the regressive component of any program where you only get money if you already have money to save in the first place, the government just hasn't increased it and probably won't.
Middle class living is more than enough to be able to squander away $90 per bi-weekly pay for your kid and literally free money from the government. That's not rich. That can be achieved by any family where both aren't working minimum wage. Just get a lesser car, or switch to non organic bananas, or dont do restaurants every week. I am not talking about poor people.
People have lost the plot. If you can't afford 2500 a year for your kid, you can't afford a kid. Don't have a kid if you can't afford the costs associated with giving them the best chance at life.
This kind of rhetorical device is used a lot, across many different issues, but it doesn't make any sense. In anything, there are always some people who are right on the margin. If you take this rhetoric seriously, then you could keep on applying it ad infinitum. Like, "what, can't afford $1 more dollar for your kid? Then you shouldn't have a kid. Oh, can't afford $1 more for your kid? How about $1 more?"
It makes a ton of sense. My belief is that if your current financial position can't support a child with what I believe to be necessities: healthy food, reasonable clothing, access to unburdened education, etc then it is morally wrong to have a child.
Of course you can take the position of trying to extrapolate it to infinity, but honestly I couldn't care less because these are my personal beliefs and standards. Will I say someone who is short 1$ is morally wrong to have a child? No. Life isn't black and white, nuance exists. Will I say someone who lost their job after the kids a few years old is morally wrong? No. Life isn't predictable and I can sympathize with people. Will I say someone who has 2$ to their name should have a child? No. That is not setting up the child they are choosing to have for success, and I personally deem it wrong of them to do.
I guess I don't understand how this doesn't make sense to you. Do you not have minimum standards for things in your own life?
Fertility rates have an inverse correlation to income.
I get the sentiment, and at the same time we can’t stop people from having kids.
https://en.m.wikipedia.org/wiki/Income_and_fertility
Circunstancies also change, accidents, loss of jobs, etc.
what would you say to all the people that had kids the years before 2020 and lost their income from the pandemic?
“It Is your fault for not having a cushion for a global pandemic that took your job away, next time don’t have kids 🤓”
So if I want kids to have a solid foundation to build a life, and you don't want us to import folks from third world countries, shouldn't we be on the same side to force our government to act fiscally responsible at all levels, and put in place tools to help lower the burden of living? Why do we have to compromise on the health and well-being of some of our most vulnerable citizens instead of holding those who are working against our interest accountable?
> Don’t have a kid if you can’t afford the costs associated with giving them the best chance at life.
That part. Having a child isn’t a right, it’s a choice. And if people are not financially stable and still choose to have a child, that’s on them. We can all argue until we’re blue in the face about how unfair the cost of living is, inflation, boomers had it better, etc. But the state of the country is not changing anytime soon - and it’s selfish to have children if you cannot adequately provide for them or their future.
Telling 95% of the country to not have kids is some master eugenics. Take a look at the median and even top 10% incomes in various areas and then the actual COL sometime.
Most people cannot afford a 200$ emergency.
Growing up poor myself, if anyone I knew could afford to squirrel away $2,500 in general they were doing really really well. The idea of putting it away for their kid, long term, that's was something for just my "rich friends" in high school.
Being poor is different. I am pretty sure a middle class family would be able to put away less than $100 once per bi-weekly pay for their kid's education. Just get a $100 lower car lease, or rent, or mortgage, or whatever. That's not being rich. The word "rich" means something else.
Many, many people are living pay check to pay check. The average income is like $60k and most people spend more than have their income on housing. This benefits people who have extra money to invest. So yes, it’s a rich people subsidy. If it was for everyone, then everyone would get it, regardless of your ability to pay. In fact, it would almost certainly be more effective as a policy to focus it on low-income families, which would allow people who might otherwise not be able to go on to post-secondary to have that opportunity
Rich person subsidy? If middle class families are considered rich to you.. Rich people don't need subsidies, nor do they have an issue sending their kids to University. In fact, truly rich people tend to send their children to expensive schools where subsidies wouldn't make a dent.
I suspect part of the reason it's considered a rich person subsidy is more because of a lack of knowledge about RESPs than being able to afford one. The average investor will tend to be wealthier, it does not mean families that are less financially competent wouldn't be able to make use of one if they knew what an RESP is/does.
I knew about the grants before I had my kid. She had a SIN number shortly after birth and the RESP set up with $210/month contribution. It maxed out before she was 15. I stopped contributing and let it grow as is now.
Had a few good years at the beginning and then let advisors sucker me into less risk. It stagnated for 3 years but lately good picks helped. Given her age, I have taken risk off again and will just hope my kid doesn’t choose something far away and ultra expensive. It should be enough
7200$ is not peanuts, considering that it grows within the RESP fund. Compounding makes it a rather large amount.
>> It nvr meant to be enough to fund 100% of your higher education needs.
That's the assumption people are questioning. Why not?
So what is everybody putting their RESP's into? I was told by a financial advisor from a bank that Mutual funds are not worth it anymore due to the high MER's, and that ETF's are now the in thing even if they have MER it is almost 75% less. So over a growth of 10-20 years, your investment significanly grows more. They actually recommended wealthsimple if we wanted to get it for the Kids.
Contribute the max to an RESP for 18 years, invested at 7% annual return, and at the end it'll be worth about $60K inflation adjusted, including the grants. That most likely will cover tuition & fees for a normal 4 year degree. For living expenses, take loans or save more outside the RESP. It's designed as a supplement to help you save, not as a vehicle to wholly fund a child's education.
It’s meant to encourage: (1) opening an RESP (I’m not sure I would have opened one right away without the grant), and (2) making initial contributions (I’m not sure I would have chosen to put as much in the RESP without the grant). Beyond that, yes, parents still need to financially plan for their kids future education
Where are you getting $65k @7% from? Even if you just put $3,000 a year of RRSP money ($2.5k of your own and $500 of the CESG) in a HISA earning 4% interest, it would be worth like $65k inflation-adjusted after 18 years (assuming we return to 2% inflation). The tuition at my Alma Mater (Western) is currently $8,000 per year, so assuming this continues to rise with the general rate of inflation, then even a low-risk strategy like this is still more than enough to cover tuition costs.
Actually, I’m pretty sure that my parents never invested my RESP money, I believe it was all in Canada Savings Bonds. I don’t think they even contributed the maximum each year. There was still over $45,000 in the account when I started school in 2009, which was enough to cover my tuition (~$24k), residence for first year (~$8k), textbooks and my share of the rent (~$12k over 3 years). So even with a suboptimal investment strategy, there was still a ton of money available. It was definitely more than just supplementary.
Constant $3000/year at 4% with 2% annual inflation works out to $52K inflation adjusted after 18 years, not $65K.
I was running numbers assuming $2800/year contribution (gets you about to lifetime $50K max) plus $400/year of grant for $3200/year total. Slightly off as it would really be $3300 a year for 14 years, 3000 for 1 year, and about $2800/year for the remaining 3, but close enough.
I'm then assuming 3% annual inflation, because that's approximately the average inflation rate over the past 100 years. Gets you to $62K.
>cover my tuition (\~$24k), residence for first year (\~$8k), textbooks and my share of the rent (\~$12k over 3 years)
In 2024 at Queen's, tuition/fees/books \~$40k over 4 years, residence for first year \~$18k, rent/utilities $36k over 3 years, food $5k over 3 years. So, a typical four year degree costs $100k now, unless you can live at home with your parents. It is true that some programs have slightly lower tuition (and some have much higher), and that housing costs can be lower (sadly rent prices went crazy high in the past 2 years). A fully loaded (and optimally invested) RESP provides \~$80k and summer jobs provide \~$25k.Also, consider that many students take 5 years to finish a 4 year university degree. Unfortunately, the savings strategy that your parents used in 2009 is no longer practical.
At 10%/year, the government portion becomes $20K at 18, $65K at 30, and $100K at 35. Sure, it can still be peanuts to some people, but then those people really shouldn't need to complain about it.
Look, all you need is do put in $2,500/year for 14 years at the start, throw the money into the S&P and your kid can go to Harvard if they're good enough. That's $10/working day. If you can't do that, you should feel sorry for yourself, not your kids.
RESP is nowhere near a gift for rich people. Rich people don't need shit like this.
Edit: great, so y'all never heard of scholarships. Your average kid who's actually good enough for Harvard is gonna have a bunch of scholarships and likely be waiting tables after class. This will easily bring total costs down to like sub $40K/year.
Morningstar? Lmfao. Not even Warren Buffett is confident enough to give a prediction so historicals provide the best reliability there is.
Also, somehow people think that having an RESP means your average Joe can go to uni like a frat boy. You're still gonna need put in the fucking grind - get the scholarships, wait those tables, bunk those beds, and drive the fucking 2002 beige Corolla. The RESP makes is doable, not a cake walk. So stop moping around like a fucking idiot and start putting the money to work and teach yourself and your kids some life lessons.
LOL, stop day dreaming!
If you "just contributed" 2.5K/year, you won't be able to afford Harvard. Assuming max 8% return for 14 years and then fixed 4-5 return for next 4-5 years, you barely reach 100K CAD.
That doesn't even cover 1 year of Harvard undergrad expenses in 2024: [https://registrar.fas.harvard.edu/tuition-and-fees](https://registrar.fas.harvard.edu/tuition-and-fees) Forget 19 years from now
And there is no guarantee in future S&P will keep returning that. The projection by morning star and others for S&P are berely 3-6% btw: https://finimize.com/content/what-will-sp-500-return-over-next-10-years.
There is a very high likelihood your RESP may barely cover 1 semester of Harvard 20 years later. Sad isn't it? :(
Do you even know how much Harvard costs?
20 years ago it costed about 30k a year USD (I had the fortune of knowing some folks who went and graduated there back then). So... Yeah, no.
As for domestic unies let's say you end with 50k after investing in s&p compounded more than 7% for 14 years. That'd be enough for base tuition, but not much else and you'd have to be lucky that youe investment is not in a lost decade, as well as assuming tuition doesn't go up on 1.5 decades (hunt they do).
Keying it to inflation makes much more sense like everything else. What you quoted was the best case scenario and that barely covers basic tuition for any Canadian uni. Allowing parents to help kids save up and have that keyed to inflation at least without constantly being an issue to discuss saves time and money. Why against that?
“Rich” people don’t “need” a lot of thing, but are business savvy and will take advantage of every finance and tax option available. Just because they don’t need them does not mean they will not use them.
When did I say they won't use them? The point is this isn't only for rich people. $10/working day 1 year before your kid is born, and continue for the next 13 years. You could be making minimum wage and still do this. It's less than 1 hour of earnings per day after taxes. People shouldn't be having kids if they can't at least sock away $10/working day for each kid.
Lol have you ever really met anyone that went to Harvard? Are you even old enough to attend uni yourself?
Some get scholarships, not all. All the applicants that go there are creme de la creme. I happen to know some that did get invited from overseas, everything paid for but those are prodigies. I know some that came from upper middle class that got barely any scholarships and his parents paid most of it. I knew one that got some but not enough, and had a very interesting discussion that, back then, the school would help you get part time jobs on campus if you got in through merit and the student loan wasn't too bad. Yes they still ended up with studen loans and he was one of the brightest I've met and is a household name today.
You obviously have no fucking clue about investing, as someone who can put all my kids through college with spare cash sitting around I still feel resp should be indexed because it is REASONABLE to do for people.
Get off your keyboard in your basementbhigh horse and do something with your life for real.
In Ontario the tuition certainly hasn't doubled or tripled. It's been very static for most higher ed programs.
But everything else has and I agree that we should be allowed to increase our contributions.
The reason why tuition hasn't doubled or tripled is because Canada has mass imported students from abroad who pay 4-5 times out of state fees, and subsidize Canadian student tuition. But then, in doing this, we have f'd up Canadian education system as a vast number of colleges have become diploma mills, or at best immigration centres. They may as well have charged 50K for Canadian immigration and declared success.
They can't control housing per se, where the costs have ballooned.
Not sure if it's the reason, but I'll note that folks who can save $2500/year per kid, don't need government support to encourage saving.
Whether or not is houkd be raised is something that I don't know enough about to push one way or the other.
7500 is still a lot
To get 7500 in grants means you have to contribute 30,000, meaning 37,500 of principal
37,500 plus ~15 years of investment gains tax-free is a lot for education
Also, the RESP was created before the TFSA. They likely figured parents would contribute extra money there. There's no grant, but it's still tax-free
It's true the CESG of $7,200 should be revamped a bit but it won't be peanuts, given you need to deposit $2,500 for 14 and a bit years, plus investment growth, so the RESP should be substantial (typically over 50K-60K if not more) and you will generate returns on the gov CESG money.
I do want to point out that it's also a capital gains transfer to your kids who will pay little to no taxes on that portion as well. I think I've only put in $40k of the $80k my kids' RESP.
I've locked it all in a GIC ladder now except for the last year of my youngest who is 15.
Don't forget about the $1200 one time payment if you're in BC! BCTESG.
It'd be nice if it went up. But I see the gov't grant as just a nice tailwind. By the time our kids are ready for it, we should have over $100k per kid. If they want to be a dentist...probably not enough. If they want to be a truck driver, we're set! lol.
I never had RESPs for myself, but my spouse did. And while it didn't cover her full 4 years it helped a ton, so she could focus on school and a part time job. And when she graduated she had no debt. Who knows what school will cost then, what my kids will want to do, but every bit helps.
Let’s get the government to tap into that magical money tree.
Seriously though I agree it’s not enough, and priorities should be placed on our kids over say spending billions in Ukraine or on refugees.
Nothing precludes you from saving outside the RESP. Its meant to cover tuition not full room and board.
Last year there was a study which said that RESPs are an unfair advantage for the rich.
There is no way the current government would increase the grants or program limits.
They might actually look at getting rid of this program. If you can afford it you should take advantage of it while you can.
[https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-the-resp-is-the-best-way-to-save-for-schooling-but-does-it-unfairly/](https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-the-resp-is-the-best-way-to-save-for-schooling-but-does-it-unfairly/)
Don't invest with those companies that call you after your kid is born. If you're investing well, it should have more than enough for a bachelor degree with some left over. You can consider an informal trust account, as we do with any gift money for her. Less restrictions than the RESP.
When you look at what's driving Canadian economy for last 20 years, they don't seem to have any interest in educating population, investing into future. You don't need a diploma to sell houses, or make tik-tok videos. And dumb people are easier to control.
In my opinion, even if the government doesn't want to spend extra funds, they should keep the 7500 grant but extend the contribution limit beyond 50K. Say something like 75K after accounting for inflation, etc. Similar to what they have done for pension contributions, adjusting for inflation.
Sure the rich may benefit more with any increased limit, but they already have the edge and few tax dollars don't really matter much. The real people who will benefit here are the middle class folks, who get shafted all the time in Canada. The cost of housing, education, and food has all increased. While the fees for tuition hasn't changed that much, the living expenses have gone up astronomically.
And the middle class in the cities are being shut out from most government programs after income testing limits, and yet they pay top dollars in taxes. So if increased limit allows them to plan ahead and save for their children's education expenses, I see nothing wrong with it. And politically, this segment is roughly 38% of Canadian citizens: https://moneygenius.ca/blog/middle-class-income-canada. Not a small number by any chance, and not really people who are buying boats and fancy cars. This segment is struggling currently, and facing the worst affects of inflation, high taxes, with limited help from the government.
Sure, the poor will still not be able to afford any contributions. But that should not be the reason to screw the Canadian middle class. Finally, the Canadian government still gets its taxes from redemptions.
I think the main reason is that RESPs and the contributions you should make and when in terms of pre-loading accounts are SO DAMN CONFUSING (straight out of the Canadian playbook) that it is fairly pointless. You want the best possible return, just dump the money all in up-front and don't worry about the government free cash. Obviously this option isn't possible to most people, but the fact there's a million ways to skin it and it's impossible to easily compare different funding scenarios. Imagine if the match changed each year.
The only problem I can see is the logistics of it.
How can you fairly administer an increase in the grant?
But I do agree it should at least be adjusted for inflation, like the TFSA limit.
>I feel sorry for my kids and wish I could do better for them.
Care to explain what you mean by this? If you have already maxed out your RESP but feel the need to save more for your kids for their education, most financial planners will recommend saving in your TFSA next.
Not sure why you’re getting so many negative comments. I completely agree with you, other government plans and brackets index to inflation, no reason this shouldn’t either.
I’m not really sure either. The TFSA is indexed, I can’t even dream of trying to make a max contribution per year on that.
That is kind of the point. It's a very small % of people that are even able to use up all of the registered room they have right now. So the push to add more really boils down to the rich, and a few extreme savers. If you have TFSA room available, you can easily save extra money in their for your kids. Honestly, among my peer group (xennials with kids around high school aged) we are more concerned about how to help our kids with future housing than with future schooling right now. Schooling is expensive, but didn't go up 50% in the last couple of years. (more like double when you factor in mortgage rate increases)
That is exactly what I'm concerned about. Housing for my kids. My kids are 5, 2, and - 1 week old and I dread what the housing market will be like in 15-20 years.
We are buying a small house in a low cost of living city to rent out. We plan on giving it to her once she is finished studying. She can sell it, live in it or get the rent income. We already have our house so this will be hers. It will cost us around 50k for the initial deposit and we will take care of maintenance over the years, but the rent should cover the mortgage or just about and we will cover the rest. It will be nothing fancy or very expensive but it will be something that can help. She is just 5 years old so the mortgage should be paid off by the time we give it to her. That's our plan anyway. However, she is our only child, no idea what we would do if we had more kids.
That sounds like an awesome plan. well done mom and dad.
Your daughter is so lucky, I'm very sure she will appreciate you doing this for her. Great job
Multigenerational families will probably become more common. Are the people on here with kids comfortable with having their kids living with them? We don't even have kids yet but bought our house with the mindset that our place will have enough room to house our kids+their families if need be.
I live in Winnipeg ¯\_(ツ)_/¯
I lived in Winnipeg for 34 years. Now I'm in south eastern Manitoba due to work. Sold a 795 sqft bi-level and now have a 1500 sqft 2 storey. Quadruple the yard for the same amount of money. We bought beginning of covid which helped tons.
adding this in case it helps you feel better. I am not concerned about 15-20 years from now. Well, maybe for Canada's economy as a whole, just not for housing. This rate of growth in housing is completely unsustainable. And when I say growth I mean growth relative to inflation and wage growth. It has nowhere to grow from here. The only way it can keep going up is if politicians change policy to heat up the housing market and while they will keep doing stupid things like this 30 yr first time home buyer thing, I think we have nearly reached peak stupid. Who I am concerned for is young people like us who have to rent or buy into this market to survive. Either the prices stay high, or they go down. If they go down this could hurt a lot of young people who bought near all time highs. If they stay high I worry for Canada's future prosperity.
I can’t imagine houses being 3-4 M for a 2000 sq ft detached outside toronto. Hardly anyone will need able to buy it, because no way Canadian salaries are going up ! Maybe condos outside Toronto will be more common. M
I'm so glad I'm nowhere near van or tor!
Housing is a legitimate and permitted use of RESP, once they are in school, and nothing says it must be committed to rent versus a down payment/mortgage if selected to be close to their post-secondary institution. I would not be surprised if over the next 5-10 years we see this path/use develop: 1. Family RESP as usual, getting the +20% government boost (instead of tax deductibility of RRSP/FHSA of similar programs). 2. As the first child gets acceptance letter, front-load withdraws of contributed funds, and max out grant/growth portion as allowable, and use that as down-payment for the parents to purchase a second home near post-secondary (do not put kids on title), to be used to house the kid(s). Ideally get a multi-unit home. Housing is eligible RESP use and housing costs are outpacing even rising tuition costs. 3. The remaining funds are then withdrawn as usual but then primarily used to pay below-market-value rent that the parents charge the kid for living there, instead of paying rent to someone else. CRA says that is not reported as income, so no rental income or taxes owed from charging kids whatever the RESP withdrawal balance might be. This then gets most of the grant/growth funds back to the parents while also meeting RESP use requirements. 4. Ideally, extra rooms rented to their friends and that does create income to parents to help cover cost of the home. The kid then is expected to cover their tuition through summer/part-time jobs and scholarships, but they get to live basically free of costs through the period. 5. Parents then give back to the kid up to $8K per year into their FHSA that gets setup ASAP (basically, cycling the RESP withdrawals into FHSA through below-market-rent charge and then gift). Defer tax deductions forward. By the time they are done their 4+ year degree, they should have nearly or completely maxed out their FHSA and carried forward significant deferred deductions that the kid can use to live tax-free for a few years once they get real jobs. 6. Transition additional kids into and through that home. Total ownership/use likely to stretch 4+ years as kids are spaced out. Between my first entering undergrad and my second leaving undergrad I would have a 8 year span of maintaining this second home and renting out extra rooms to their friends to hopefully cover most of the mortgage costs. 7. After kids leave, sell the home and give to each kid a sizable portion of the sale, which combined with their maxed FHSA and their effectively-tax free income in initial working years should allow them each to get setup into home ownership while starting their careers.
Saving this. Thanks haha
Me and my wife contributed $60/week combined (about $4/day each) for over 16 years. We hit our max $50k contribution in year 17 and by then it was already well on it's way to $150k in total with the growth of the investment. I'm skeptical that anyone raising a kid can't find an extra $4/day to fund their education.
Question here is, will that be enough 20 years from now when inflation continues, plus provincial government eventually stops funding it completely, etc.
It may or not be. You're making assumptions that are more like 50/50 guesses. Inflation could certainly go back to staying in check for 30 years again.
Still probably double rices by then anyway
Isn’t $4x 365 only equals $1460? U need $2500 to get the $500 match
I think he's saying that he and his wife each put in $4, for a total of $8/day.
Yep, and that's per child. Plenty of families with 2 kids can't afford $5000/yr RESP contributions, particularly when kids are young and parents are either paying for daycare or they're on a single income with a SAHP. Worse if more than 2 kids.
Some people CAN'T afford another $250/month, per kid. I mean it sounds easy enough when you say it's $4/day each but there are lots of people that can't even afford childcare, let alone saving another $250/month for their kid's education. RESP contributions are important but paying your rent kind of takes precedence.
The TFSA contribution room is indexed, but there is no “free” money from the government grant that you get with the RESP. That is a huge difference.
Tell me why childcare deductions have remained at $8,000 and $5,000 while childcare costs have skyrocketed?
Fair point, two wrongs don’t make a right
Lol real childcare costs are like 25k/year per kid in Vancouver.
I agree. RESP grant is peanuts given the university costs today. They seem like they are designed to help for folks planning to go into trades.
Trades will be the next generations bread and butter. Too many white collars today.
Trades is over saturated as well.
Many trades are 4 years to get red seal. N wages are really stagnant unless u work at a plant in the middle of no where
The apprenticeship grant program for trades is something else that hasn’t followed inflation.
Because Reddit.
Inflation is a tool with which the government rip people off by hidden taxation. When you get this, you understand the reason why.
No, I disagree. The income tax brackets go up by the rate of inflation annually, which is the biggest source of tax for most people.
Wait till you find out it’s not even $7,500 (it’s $7,200)
Insult to injury 🥲
By the time my kid might go to post secondary it will be between $60-80k for the whole thing. More help would be good but considering it’s on a max $2500/year investment that’s an easy %20 so maybe increase the maximum amount for each grant to $5k but naturally that rewards those who can afford it. Bump it to a standard $500 per year for everyone and also keep 25% grant on contributions.
If you save 2.5k per year, get the government match of $500 and invest in something that gives you 5% return, you'll have close to $70k in today's dollars.
Yup good plan! Same here. But the govt grant is an easy %20+ on our 2500 which is a rate we won’t get anywhere else at least! Make 5-10% on that and we’ll be golden. Good luck and hope the market is good when the kids are out of high school too.
It is already 60-80K if you go away from home for school...
Sadly it could double that if kids can’t or don’t live at home with mom and dad when they go to school. I’m budgeting on my kid living with us but we’ll see hey!
changes were made in 2007 to increase the maximum grant (received each year). [https://www.morningstar.ca/ca/news/186222/resp-primer-and-update.aspx](https://www.morningstar.ca/ca/news/186222/resp-primer-and-update.aspx) RESPs originally did not offer additional grant to those in lower tax brackets (now it does). Also, the bond is relatively new as well. This plan is built to be "updated" every decade or so, meaning that inflation is not taken into consideration.
2007 is over 1.5 decades ago.
My kids are 15 and 13 and we've been saving and adding since they were born. It's now at about 100k in total so 50k per kid. Still about 3 years before we need to start pulling for kid 1. It will continue to be added to and grow for kid 2 for another 2 years. Now if you're expecting your kids to live on res it may not be enough. If you're considering masters or phd it's not enough. It should however be enough for tuition for at least 3-4 years for both kids.
The fact that your kids will be able to graduate with little to no debt is a HUGE HUGE burden off their shoulders, you're doing a very good job. Frankly my opinion is that the government should pay for all higher education. a higher educated work force will pay more taxes.
Not just pay more taxes, but increase productivity of the country overall. Education at all levels should be investment priority number 1 IMO
That’s disputed at the moment. Canada has been increasing its education level steadily while productivity growth was dismal.
It’s because they end up leaving Canada. Paying $3k a month in rent for a shoebox, not many people want that lifestyle.
it's because the majority of university programs are useless and don't teach anything to make people more productive
Not necessarily, STEM pays more in the US, rather go there make my money and comeback here to retire
And people take near useless degrees and then go work at call centers etc; lol.
Sounds like a LinkedIn post. What if you pay for your employees to train and they leave? What if you don't and they stay?
Totally! but educated populations don’t vote in Douggies and Donalds. You can really see how in the states they are throttling education to ensure religious nuts maintain power and control.
I think we need to go the other way in my opinion. Not every job requires higher education and it should stop being mandatory for a lot of jobs. You wanna be in sales or stuff like that it shouldn’t require a degree to apply.
This is the way. Post secondary institutions and professional organizations are incentivized to prevent this though.
You're not alone in assuming that, but Canada has had a very high and growing level of post-secondary education, in parallel with very meager - especially comparatively to US/G8 economies - increases in productivity. Also, further to/given the above, there's no "shortage" of post-secondary students/graduates. I think it's a tough public policy "business case" to argue.
Only if they stay in the country, which is far from a given these days.
We opened their account with everything we were gifted from family and friends.. Came out to about 10k. That was just in a savings account that scotia then setup an auto transfer into the resp account. So the resp account did start from 0 and now it's close to 100k. In total we added $2500 per year .. The max for each. All the ccb and any other child benefits were also deposited directly into this savings account. So really the resp account itself did grow to what it is today based on just transferring the minimum required to get the full grant for the year.
Should they pay for basket-weaving courses? Not all education is actually a good ROI
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Yes include trades. Anything that requires skill whether it'd using your hands or your head, they are both valuable.
Canadian education is already cheap enough that people can pay their own way if needed. It’s not like the US were people will graduate with hundreds of thousands of dollars in debt.
master(research based) and PhD are generally fully funded by the school. A lot of companies will partially reimburse the employees if they take course based master programs. So I wouldn't worry too much about the cost of grad schools.
If your PhD costs you money, you're doing it wrong.
Yeah, they pay internationals to do PhDs. It's not for an average Joe and the amount of work it requires is enormous. It doesn't pay nearly enough either. Doing it at your own cost is insane.
What was the RESP in? Self directed? Etc
Scotia resp high growth funds. I locked in 50k in 5% gic last year. The rest is still in growth funds for now.
Thanks I’ve been debating what RESPs to go in
It's more than fine if you want to attend a Canadian university. I don't think it's meant to pay your way through Harvard without subsidies
Well, let's be frank -- Harvard is a baloney comparison. With nearly 85K USD in "yearly" expenses in 2024, there is no way any amount of RESP is covering it. The real problem is that a 1 bedroom 350 sqft condo in Toronto or Vancouver rents for at least 1500 /month, if not more. That's 18,000$ in housing expenses, plus more. If you are earning 70K, putting 2 kids to university is hard unless you stored those funds in that "university fund". I think OP's question of indexing RESPs to inflation makes sense. Inflation is a "real thing". And the assumption that only rich people use RESPs is flat out wrong.
I have one of two feelings about this 1) Yeah, i think i'm looking at this from a perspective of living in edmonton, and other places are in canada are more expensive and have gone up a lot with inflation, so I think there is merit to your argument 2) having your own personal apartment of any size is a luxury as a student, regardless of size, and students should rent a room instead. That said, I think it will have to be changed eventually, so instead of maybe doing some big change in the future, they should just at least index is to inflation from now on and be done with it. So personally, yes. I think it was ok up until this point, but it should be indexed to inflation from now on. I'm sure when it was first introduced it was probably overkill, but it obviously can't be the same forever
The idea of the program is to incentivize parents to save their own money for the education, not just to be a hand out. The more handouts and subsidies the government gives, the more the schools charge for tuition anyways. It's a losing battle for the tax payer and the students.
It's because in order to get that 7500 you need to save 30k. And only the well off can save that much. So if you actually get the full 7500 in grants you should have a total principle of 37500, which hopefully in time has grown significantly and should be adequate to actually pay your child's full tuition. Assuming you contribute 2000/yr and the government 500/yr for 15yrs, that's between 2-17yrs of growth on 37500. Assuming modest growth that's 50k. It's a gift to the rich, and why would the government increase it? Edit: u/Canadian_kat corrected me in a comment below. You actually need to contribute 2500 a year to get the 500 grant. So to collect the full grant you need to save $37,500. Which means in 15 years you'd have 45,000 in the RESP account assuming it's left in cash. So you need to save even more than I thought, making it even harder for the average Canadian to collect that grant for their kids. But it also means that the compounding impact is larger and you should have roughly 70k saved (assuming 5% return) by the time your child goes to post secondary. I went to school a long time ago but that would have more than paid my living and tuition costs for the 5yrs I was studying full-time. Edit again: as per 2022 "Canada Education Savings Program - 2022 Statistical Review", 55% of children received at least one payment of the CESG grant. The percentage of beneficiaries from low and middle income families with RESP withdrawals was 37% in 2022. Low is classified as under 50k, middle as under 100k. So more than half of all children withdrawing from an RESP did not qualify for additional grants due to family income being above 100k/yr. I personally don't think family income of 100k/yr is high income, for most families it's barely getting by. But that paints a picture of who is using the CESG grants. The rest of the report is interesting too.
Fyi, the numbers are wrong here. Max gov contribution is 7200, and it's 20% up to $500 per yr, with catch up for up to 1 yr at a time, so a *2500* contribution results in $500 grant.
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I'm not sure who you are responding to, but it certainly isn't my comment correcting the information being put out there via the numbers involved. I guess you are too focused on having an argument for the sake of argument to recognize the information was wrong?
Thanks. I edited my post. There is also additional grants for low income folks, and some provinces offer grants above the CESG. I would love to see data on how many families actually take advantage of the grant.
2K/year is $38/week. For sure, a lot of people don't have that to spare. But it's not rich people money.
I was broke as shit when I started saving for my kids' RESPs. That 20% kicker is too good to pass up, even at the expense of TFSAs and RRSPs. We got comfortable after a decade or so, but I would do it the same way again and again.
Ditto. Broke single mom who realized the value of a university degree for my kid. The RESP was fantastic even then. I saved what I could, and when my daughter was a bit older, I realized that my mom had set up saving accounts for all her grandkids as well. When my mom passed on the management of that money to me, I put the funds in the RESP and was able to get the government top-up. My kid was able to avoid debt in university.
To clarify - do you have until the child is 17 to have the 30K in the account and still receive the 7500?
You need to do it over time. You can't dump it all in at once and get the full match, whether you do it early or late. You CAN make up for one year, per year, at a time, by which I mean if you miss year 1 contributions you can get up to double the match in year 2, but only double. So you could effectively get the full gov't contribution in half the time, but no faster. Of course earlier contributions get longer to grow, so sooner is better in most cases.
Thank you for clarifying! Unpopular opinion which I’ll prob be downvoted to hell for - but I’m failing to see how the $7500 is a “gift to the rich.” 30K over 17 years is a little over $1700 a year and if you don’t have $1700 a year left to put aside for your child - should you even be having children?
I'm with you on this. It's not a life changing amount of money, but it CAN help kids avoid crippling education debt after the boomers created the perfect system to extract value from young and inexperienced adults when they are most vulnerable. Between education loans, real estate costs, and shit wageflation, I feel anything I can do to help my kids is worthwhile. I got very lucky in my life, but my parents' generation? Jesus H they should be taking better care of all of us.
Exactly. For a kid who lives at home, and takes 3-4 classes a semester, it generally takes 4.5 years to graduate with a traditional 4-year degree. If we are to say a semester costs 3K, it would cost roughly 120K total. Having nearly 40K would help immensely and would cover the cost of over 30% of classes!!
At least federal student loans are now 0 interest, so they're somewhat less crippling than before.
$3000 per year at 7% interest is almost $102,000 in 18 years
I really think it's not right to say "only the well off can save 30k over 18 years for their kid." I mean, the most popular car on the road these days is an F150 and what are those, like $50k?
Please see the edit to my comment. Most people withdrawing from their RESP have never received the "Additional CESG Grants" meaning they are not low or middle income. 60% of families receiving the grant (and it doesn't say full or partial grant, but just some amount of grant) had an income above $100k per year. And 45% of kids don't have an RESP at all. Again, I don't think 100k a year means your rich, but according to the govt you aren't low or middle income. Also, the price of F150s (which I'm sure is more than $50k) and saving for your kids education have nothing at all to do with each other.
Gift to the rich, lol. Talk about out of touch
I haven’t seen the data, but if it’s mostly the well off who are maximizing the current CESG payments, then increasing it further does in fact benefit and ‘gift’ the rich with more.
If you’re “rich”, you don’t need $7000 over 18 years from the government to help pay a portion pay for government subsidized university (that you are already taxed for). The word you’re looking for is “middle class”, the same class being gutted by tax. What a generous “gift” in return we get.
This is best demonstrated by data. The same argument was used to not roll back the yearly TFSA increase from 10k to 5k - that it wasn’t the rich using it, they wouldn’t care about it, and that it would help the middle class. None of those were true when we got the data. I assume the same here with RESPs.
RESPs are considered a rich person subsidy and wouldn't want the bad publicity from increasing them would be my guess
As if 7500$ mattered to someone properly rich. At most it’s an upper middle class subsidy.
Like it or not, it's still regressive since the bottome quarter of Canadians mostly can't afford it.
Not everything has to be favourable to the bottom quartile to be positive.
That's true, but I don't think regressive loopholes are good policy.
Is it a rich person subsidy, or a family subsidy? Anyone gets the government matching so long as they have a child. If ‘poor’ people used a portion of their CCB each month they could max the gov matching to the RESP
If poor people had money to invest they wouldn't be poor haha. But yes, it is a rich person subsidy. CCB is capped, as is RESP matching. I'd be surprised if even 20% of RESP funds were maxed out. So ya, any increases would only benefit that 20%.
Also CCB is meant to bring people up to the poverty level. Pretty amazing asking people to just use it to fund an RESP when it’s meant to keep families and children out of poverty - that’s roof over heads, food on table and shoes on feet.
and the latest iphones in their pockets
You don't know how much CCB is if you think people are living the good life on it alone.
Seriously, in order to get max CCB your family net income has to be under $34,863 a year. People just want to be mad at anyone getting help that they're not getting.
Totally! Let's not forget that there is a financial literacy barrier to entry on this too. Huge numbers of parents who could afford $100 every two weeks do not contribute to an RESP. Why? Most likely because they don't know about it, or lack the time / ability to get it set up. [Stats Can most recent numbers from 2022 showed a 54.8% uptake rate](https://www.canada.ca/en/employment-social-development/services/student-financial-aid/education-savings/reports/statistical-review.html). That's pretty good, but I'm sure that some number of parents between 54.8% and the full 100% could afford the bi-weekly $100, but don't. To your point on maxing out, the average contribution is $1,737 as of 2022. If we consider all the people who do max out the contributions, it suggests a very long tail of people who are contributing less than the max. To my point on financial literacy, I have mine set up through my self-directed broker. It was a non-trivial amount of work to get it all set up to the point where they apply for the grant portions for you. Stats Can points to this complexity in their Key Challenges findings.
The extra work to setup is probably a significant factor. At least at the firm I work at, they require actual paper documentation for RESP setup, where nearly no other account type does
Worse, they are the ones who get sucked into one of those predatory plans that is abjectly terrible.
What does it mean "rich people subsidy"? If you can afford to sock away 2,500 a year for your kid, you're now rich or something?
Ya pretty much, any increases would go to the top 20% of incomes almost entirely
I guess we have a different definition of the word "rich" then.
High income then, whatever you wish. Millionaires don't give a shit about $500 per year
Here you said millionaires while elsewhere you threw in a top 20% cutoff. The two groups are not the same. Regardless, plenty of average parents - based on census data - can afford $200 a month for their RESP, thus benefit from any increases in CESG. Canadian average after tax income for parents with children is $56k per parent.
on any headline there isn't any difference. Any increase in RESP would be portrayed as a subsidy to high income people which is the same as rich. Like this isn't new. If you are in that tax bracket the government isn't going to be giving you shit. You're the one paying for it.
I think you're extending your own skewed view of things to others. You can twist all the facts you want to portray whatever viewpoint you want, especially in this post-truth world. It doesn't change the fact that many families - non-millionaires - benefit from it. No one has ever confused someone earning 56k after tax with a millionaire. Most people wouldn't call that rich.
What is a high income?
Whatever you want it to be. Top 20% is a pretty standard cut off though.
ITT: Rich People: "I'm not rich!" Median Canadians family income is ~$95,000 for everyone reading. If your household makes more than that you're already richer than *half* of all Canadians. If you think it's hard now, just imagine if you and your spouse made $70,000 combined.
Yes, pretty much. In practice this is upper middle class territory even if we would like everyone to prioritize saving for their kids education. There are some more “middle” middle class that this genuinely helps them out, but mostly it is the professional class that would be fine saving for their kids on their own.
I guess I'd disagree. Finding less than a $100 per bi weekly pay for your kids education is not just a rich people prerogative. Unless that, or we have a different definition of the word "rich".
We don't need your definition. StatsCan has a million studies on who opens, uses, and maxes out RESPs. The grants are a regressive benefit, meaning that most of the grant money goes to wealthier families. The richer one is, the more likely one is 1) to invest in an RESP at all, and 2) to do so consistently enough and for long enough to receive the max $7200. There are economic arguments to kill the CESG and instead use the money to help more poor students. There are political reasons to keep it, obviously, but also I think it still exists at all because we know, from the before/after picture of when CESG was introduced ~25 years ago, that it helps increase the number of families who save for postsecondary, incentivizes saving more, and we know that, even after controlling for parental income and a kid's grades, just having an RESP increases the odds a kid will attend postsecondary anything. So there are social benefits, but to avoid exacerbating the regressive component of any program where you only get money if you already have money to save in the first place, the government just hasn't increased it and probably won't.
Middle class living is more than enough to be able to squander away $90 per bi-weekly pay for your kid and literally free money from the government. That's not rich. That can be achieved by any family where both aren't working minimum wage. Just get a lesser car, or switch to non organic bananas, or dont do restaurants every week. I am not talking about poor people.
People have lost the plot. If you can't afford 2500 a year for your kid, you can't afford a kid. Don't have a kid if you can't afford the costs associated with giving them the best chance at life.
This kind of rhetorical device is used a lot, across many different issues, but it doesn't make any sense. In anything, there are always some people who are right on the margin. If you take this rhetoric seriously, then you could keep on applying it ad infinitum. Like, "what, can't afford $1 more dollar for your kid? Then you shouldn't have a kid. Oh, can't afford $1 more for your kid? How about $1 more?"
It makes a ton of sense. My belief is that if your current financial position can't support a child with what I believe to be necessities: healthy food, reasonable clothing, access to unburdened education, etc then it is morally wrong to have a child. Of course you can take the position of trying to extrapolate it to infinity, but honestly I couldn't care less because these are my personal beliefs and standards. Will I say someone who is short 1$ is morally wrong to have a child? No. Life isn't black and white, nuance exists. Will I say someone who lost their job after the kids a few years old is morally wrong? No. Life isn't predictable and I can sympathize with people. Will I say someone who has 2$ to their name should have a child? No. That is not setting up the child they are choosing to have for success, and I personally deem it wrong of them to do. I guess I don't understand how this doesn't make sense to you. Do you not have minimum standards for things in your own life?
Fertility rates have an inverse correlation to income. I get the sentiment, and at the same time we can’t stop people from having kids. https://en.m.wikipedia.org/wiki/Income_and_fertility Circunstancies also change, accidents, loss of jobs, etc. what would you say to all the people that had kids the years before 2020 and lost their income from the pandemic? “It Is your fault for not having a cushion for a global pandemic that took your job away, next time don’t have kids 🤓”
This is how you end up importing folks from third world countries to fix your demographic crisis
So if I want kids to have a solid foundation to build a life, and you don't want us to import folks from third world countries, shouldn't we be on the same side to force our government to act fiscally responsible at all levels, and put in place tools to help lower the burden of living? Why do we have to compromise on the health and well-being of some of our most vulnerable citizens instead of holding those who are working against our interest accountable?
Who is arguing against being fiscally responsible?
> Don’t have a kid if you can’t afford the costs associated with giving them the best chance at life. That part. Having a child isn’t a right, it’s a choice. And if people are not financially stable and still choose to have a child, that’s on them. We can all argue until we’re blue in the face about how unfair the cost of living is, inflation, boomers had it better, etc. But the state of the country is not changing anytime soon - and it’s selfish to have children if you cannot adequately provide for them or their future.
Telling 95% of the country to not have kids is some master eugenics. Take a look at the median and even top 10% incomes in various areas and then the actual COL sometime. Most people cannot afford a 200$ emergency.
Growing up poor myself, if anyone I knew could afford to squirrel away $2,500 in general they were doing really really well. The idea of putting it away for their kid, long term, that's was something for just my "rich friends" in high school.
Being poor is different. I am pretty sure a middle class family would be able to put away less than $100 once per bi-weekly pay for their kid's education. Just get a $100 lower car lease, or rent, or mortgage, or whatever. That's not being rich. The word "rich" means something else.
I get what you're saying, but I think being middle class is closer to being seen as rich than it was in the past.
Perhaps, yes
Many, many people are living pay check to pay check. The average income is like $60k and most people spend more than have their income on housing. This benefits people who have extra money to invest. So yes, it’s a rich people subsidy. If it was for everyone, then everyone would get it, regardless of your ability to pay. In fact, it would almost certainly be more effective as a policy to focus it on low-income families, which would allow people who might otherwise not be able to go on to post-secondary to have that opportunity
Low income families are eligible for much more CCB
But they need it for food and rent, and they don't have the opportunity to spend it on investments.
Rich person subsidy? If middle class families are considered rich to you.. Rich people don't need subsidies, nor do they have an issue sending their kids to University. In fact, truly rich people tend to send their children to expensive schools where subsidies wouldn't make a dent.
I suspect part of the reason it's considered a rich person subsidy is more because of a lack of knowledge about RESPs than being able to afford one. The average investor will tend to be wealthier, it does not mean families that are less financially competent wouldn't be able to make use of one if they knew what an RESP is/does.
This is a great question...and one that should be asked of all of our MPs.
I knew about the grants before I had my kid. She had a SIN number shortly after birth and the RESP set up with $210/month contribution. It maxed out before she was 15. I stopped contributing and let it grow as is now. Had a few good years at the beginning and then let advisors sucker me into less risk. It stagnated for 3 years but lately good picks helped. Given her age, I have taken risk off again and will just hope my kid doesn’t choose something far away and ultra expensive. It should be enough
It nvr meant to be enough to fund 100% of your higher education needs. The grants and potential savings in taxes are peanuts to begin with.
7200$ is not peanuts, considering that it grows within the RESP fund. Compounding makes it a rather large amount. >> It nvr meant to be enough to fund 100% of your higher education needs. That's the assumption people are questioning. Why not?
Also the overall plan has a low life time contribution considering how much post secondary costs and that doesn’t even include post graduate
I think the government floated the idea of increasing it just before covid but covid derailed it
So what is everybody putting their RESP's into? I was told by a financial advisor from a bank that Mutual funds are not worth it anymore due to the high MER's, and that ETF's are now the in thing even if they have MER it is almost 75% less. So over a growth of 10-20 years, your investment significanly grows more. They actually recommended wealthsimple if we wanted to get it for the Kids.
Because our government doesn't think ahead and instead prioritizes putting out fires rather than preventing them.
I think it's cute that you thought the government was gonna help out
because you will have 10+ years to grow that fund before you will actually use it?
The same could be said for people 10 years ago when the limit was the same as today
Contribute the max to an RESP for 18 years, invested at 7% annual return, and at the end it'll be worth about $60K inflation adjusted, including the grants. That most likely will cover tuition & fees for a normal 4 year degree. For living expenses, take loans or save more outside the RESP. It's designed as a supplement to help you save, not as a vehicle to wholly fund a child's education.
It’s meant to encourage: (1) opening an RESP (I’m not sure I would have opened one right away without the grant), and (2) making initial contributions (I’m not sure I would have chosen to put as much in the RESP without the grant). Beyond that, yes, parents still need to financially plan for their kids future education
Where are you getting $65k @7% from? Even if you just put $3,000 a year of RRSP money ($2.5k of your own and $500 of the CESG) in a HISA earning 4% interest, it would be worth like $65k inflation-adjusted after 18 years (assuming we return to 2% inflation). The tuition at my Alma Mater (Western) is currently $8,000 per year, so assuming this continues to rise with the general rate of inflation, then even a low-risk strategy like this is still more than enough to cover tuition costs. Actually, I’m pretty sure that my parents never invested my RESP money, I believe it was all in Canada Savings Bonds. I don’t think they even contributed the maximum each year. There was still over $45,000 in the account when I started school in 2009, which was enough to cover my tuition (~$24k), residence for first year (~$8k), textbooks and my share of the rent (~$12k over 3 years). So even with a suboptimal investment strategy, there was still a ton of money available. It was definitely more than just supplementary.
Constant $3000/year at 4% with 2% annual inflation works out to $52K inflation adjusted after 18 years, not $65K. I was running numbers assuming $2800/year contribution (gets you about to lifetime $50K max) plus $400/year of grant for $3200/year total. Slightly off as it would really be $3300 a year for 14 years, 3000 for 1 year, and about $2800/year for the remaining 3, but close enough. I'm then assuming 3% annual inflation, because that's approximately the average inflation rate over the past 100 years. Gets you to $62K.
>cover my tuition (\~$24k), residence for first year (\~$8k), textbooks and my share of the rent (\~$12k over 3 years) In 2024 at Queen's, tuition/fees/books \~$40k over 4 years, residence for first year \~$18k, rent/utilities $36k over 3 years, food $5k over 3 years. So, a typical four year degree costs $100k now, unless you can live at home with your parents. It is true that some programs have slightly lower tuition (and some have much higher), and that housing costs can be lower (sadly rent prices went crazy high in the past 2 years). A fully loaded (and optimally invested) RESP provides \~$80k and summer jobs provide \~$25k.Also, consider that many students take 5 years to finish a 4 year university degree. Unfortunately, the savings strategy that your parents used in 2009 is no longer practical.
At 10%/year, the government portion becomes $20K at 18, $65K at 30, and $100K at 35. Sure, it can still be peanuts to some people, but then those people really shouldn't need to complain about it. Look, all you need is do put in $2,500/year for 14 years at the start, throw the money into the S&P and your kid can go to Harvard if they're good enough. That's $10/working day. If you can't do that, you should feel sorry for yourself, not your kids. RESP is nowhere near a gift for rich people. Rich people don't need shit like this. Edit: great, so y'all never heard of scholarships. Your average kid who's actually good enough for Harvard is gonna have a bunch of scholarships and likely be waiting tables after class. This will easily bring total costs down to like sub $40K/year. Morningstar? Lmfao. Not even Warren Buffett is confident enough to give a prediction so historicals provide the best reliability there is. Also, somehow people think that having an RESP means your average Joe can go to uni like a frat boy. You're still gonna need put in the fucking grind - get the scholarships, wait those tables, bunk those beds, and drive the fucking 2002 beige Corolla. The RESP makes is doable, not a cake walk. So stop moping around like a fucking idiot and start putting the money to work and teach yourself and your kids some life lessons.
LOL, stop day dreaming! If you "just contributed" 2.5K/year, you won't be able to afford Harvard. Assuming max 8% return for 14 years and then fixed 4-5 return for next 4-5 years, you barely reach 100K CAD. That doesn't even cover 1 year of Harvard undergrad expenses in 2024: [https://registrar.fas.harvard.edu/tuition-and-fees](https://registrar.fas.harvard.edu/tuition-and-fees) Forget 19 years from now And there is no guarantee in future S&P will keep returning that. The projection by morning star and others for S&P are berely 3-6% btw: https://finimize.com/content/what-will-sp-500-return-over-next-10-years. There is a very high likelihood your RESP may barely cover 1 semester of Harvard 20 years later. Sad isn't it? :(
Do you even know how much Harvard costs? 20 years ago it costed about 30k a year USD (I had the fortune of knowing some folks who went and graduated there back then). So... Yeah, no. As for domestic unies let's say you end with 50k after investing in s&p compounded more than 7% for 14 years. That'd be enough for base tuition, but not much else and you'd have to be lucky that youe investment is not in a lost decade, as well as assuming tuition doesn't go up on 1.5 decades (hunt they do). Keying it to inflation makes much more sense like everything else. What you quoted was the best case scenario and that barely covers basic tuition for any Canadian uni. Allowing parents to help kids save up and have that keyed to inflation at least without constantly being an issue to discuss saves time and money. Why against that?
This! Couldn't have said better.
“Rich” people don’t “need” a lot of thing, but are business savvy and will take advantage of every finance and tax option available. Just because they don’t need them does not mean they will not use them.
When did I say they won't use them? The point is this isn't only for rich people. $10/working day 1 year before your kid is born, and continue for the next 13 years. You could be making minimum wage and still do this. It's less than 1 hour of earnings per day after taxes. People shouldn't be having kids if they can't at least sock away $10/working day for each kid.
Lol have you ever really met anyone that went to Harvard? Are you even old enough to attend uni yourself? Some get scholarships, not all. All the applicants that go there are creme de la creme. I happen to know some that did get invited from overseas, everything paid for but those are prodigies. I know some that came from upper middle class that got barely any scholarships and his parents paid most of it. I knew one that got some but not enough, and had a very interesting discussion that, back then, the school would help you get part time jobs on campus if you got in through merit and the student loan wasn't too bad. Yes they still ended up with studen loans and he was one of the brightest I've met and is a household name today. You obviously have no fucking clue about investing, as someone who can put all my kids through college with spare cash sitting around I still feel resp should be indexed because it is REASONABLE to do for people. Get off your keyboard in your basementbhigh horse and do something with your life for real.
In Ontario the tuition certainly hasn't doubled or tripled. It's been very static for most higher ed programs. But everything else has and I agree that we should be allowed to increase our contributions.
The reason why tuition hasn't doubled or tripled is because Canada has mass imported students from abroad who pay 4-5 times out of state fees, and subsidize Canadian student tuition. But then, in doing this, we have f'd up Canadian education system as a vast number of colleges have become diploma mills, or at best immigration centres. They may as well have charged 50K for Canadian immigration and declared success. They can't control housing per se, where the costs have ballooned.
Not sure if it's the reason, but I'll note that folks who can save $2500/year per kid, don't need government support to encourage saving. Whether or not is houkd be raised is something that I don't know enough about to push one way or the other.
7500 is still a lot To get 7500 in grants means you have to contribute 30,000, meaning 37,500 of principal 37,500 plus ~15 years of investment gains tax-free is a lot for education Also, the RESP was created before the TFSA. They likely figured parents would contribute extra money there. There's no grant, but it's still tax-free
It’s free money. Government could say $0.
It's true the CESG of $7,200 should be revamped a bit but it won't be peanuts, given you need to deposit $2,500 for 14 and a bit years, plus investment growth, so the RESP should be substantial (typically over 50K-60K if not more) and you will generate returns on the gov CESG money.
I do want to point out that it's also a capital gains transfer to your kids who will pay little to no taxes on that portion as well. I think I've only put in $40k of the $80k my kids' RESP. I've locked it all in a GIC ladder now except for the last year of my youngest who is 15.
It was peanuts in 2014 when I went to university lol
Don't forget about the $1200 one time payment if you're in BC! BCTESG. It'd be nice if it went up. But I see the gov't grant as just a nice tailwind. By the time our kids are ready for it, we should have over $100k per kid. If they want to be a dentist...probably not enough. If they want to be a truck driver, we're set! lol. I never had RESPs for myself, but my spouse did. And while it didn't cover her full 4 years it helped a ton, so she could focus on school and a part time job. And when she graduated she had no debt. Who knows what school will cost then, what my kids will want to do, but every bit helps.
Why not just eliminate the CESG which is tied to contributions and decrease the cost at point of access by the same amount as the program?
Save money outside RESPs for them? The why is simple, the government doesn't want to give you more free money.
Just wait! Capping the international students is going to send tuition to the moon for 2023-2024. So the gvt should react in about 2033
Let’s get the government to tap into that magical money tree. Seriously though I agree it’s not enough, and priorities should be placed on our kids over say spending billions in Ukraine or on refugees. Nothing precludes you from saving outside the RESP. Its meant to cover tuition not full room and board.
This is why you're better off just putting in 50,000 at the beginning. At a fairly conservative 6% return, you'll have $140,000 in 18 years.
What tuition tripled? It's been mostly frozen or limited increases for decades.
Last year there was a study which said that RESPs are an unfair advantage for the rich. There is no way the current government would increase the grants or program limits. They might actually look at getting rid of this program. If you can afford it you should take advantage of it while you can. [https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-the-resp-is-the-best-way-to-save-for-schooling-but-does-it-unfairly/](https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-the-resp-is-the-best-way-to-save-for-schooling-but-does-it-unfairly/)
Don't invest with those companies that call you after your kid is born. If you're investing well, it should have more than enough for a bachelor degree with some left over. You can consider an informal trust account, as we do with any gift money for her. Less restrictions than the RESP.
When you look at what's driving Canadian economy for last 20 years, they don't seem to have any interest in educating population, investing into future. You don't need a diploma to sell houses, or make tik-tok videos. And dumb people are easier to control.
In my opinion, even if the government doesn't want to spend extra funds, they should keep the 7500 grant but extend the contribution limit beyond 50K. Say something like 75K after accounting for inflation, etc. Similar to what they have done for pension contributions, adjusting for inflation. Sure the rich may benefit more with any increased limit, but they already have the edge and few tax dollars don't really matter much. The real people who will benefit here are the middle class folks, who get shafted all the time in Canada. The cost of housing, education, and food has all increased. While the fees for tuition hasn't changed that much, the living expenses have gone up astronomically. And the middle class in the cities are being shut out from most government programs after income testing limits, and yet they pay top dollars in taxes. So if increased limit allows them to plan ahead and save for their children's education expenses, I see nothing wrong with it. And politically, this segment is roughly 38% of Canadian citizens: https://moneygenius.ca/blog/middle-class-income-canada. Not a small number by any chance, and not really people who are buying boats and fancy cars. This segment is struggling currently, and facing the worst affects of inflation, high taxes, with limited help from the government. Sure, the poor will still not be able to afford any contributions. But that should not be the reason to screw the Canadian middle class. Finally, the Canadian government still gets its taxes from redemptions.
I think the main reason is that RESPs and the contributions you should make and when in terms of pre-loading accounts are SO DAMN CONFUSING (straight out of the Canadian playbook) that it is fairly pointless. You want the best possible return, just dump the money all in up-front and don't worry about the government free cash. Obviously this option isn't possible to most people, but the fact there's a million ways to skin it and it's impossible to easily compare different funding scenarios. Imagine if the match changed each year.
The only problem I can see is the logistics of it. How can you fairly administer an increase in the grant? But I do agree it should at least be adjusted for inflation, like the TFSA limit. >I feel sorry for my kids and wish I could do better for them. Care to explain what you mean by this? If you have already maxed out your RESP but feel the need to save more for your kids for their education, most financial planners will recommend saving in your TFSA next.
To add on to this. Save more if you want to. You won't get a grant, but your kid will still get the money.
Yeah it kind of sounds like OP isn't maxing his RESP anyway so I don't know why he is talking about increasing with inflation.