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Canada Life survey finds that more than 80 per cent of Canadian parents say they don’t understand the benefits of this savings tool
Winnipeg, MB, September 9, 2021. . . A recent Canada Life study found that while the majority of Canadians (92 per cent) are aware of Registered Education Savings Plans (RESPs), less than half (49 per cent) are currently using this savings tool. Additionally, a mere 17 per cent claim they’re knowledgeable about the contribution limits and benefits they offer.
“With the rising cost of post-secondary education, a RESP can be one of the most effective ways to save for your child’s education while helping them avoid excessive student debt in the future,” said Paul Orlander, Executive Vice-President, Individual Customer, Canada Life. “At the same time, many Canadian parents need expert guidance and financial advice to help make the most of RESPs. Canada Life is here to help with that.”
Key highlights from the survey:
- Education planning is considered a top priority for Canadians with kids under 18 –education was rated second only to retirement. For Canadians without kids, education was ranked ninth.
- Among those aware of a RESP, only about one in two (49 per cent) are currently contributing or have contributed to one, with an average total contribution of about $22,800.
- Nearly half of Canadians (49 per cent) contribute monthly to a RESP account, while 29 per cent do it annually. The median monthly contribution is $210.
- Some Canadians use other methods to save for education, like in-trust or bank accounts in their child’s name (39 per cent) and Tax-free Savings Accounts (27 per cent).
- Knowledge First Financial states that by 2030, the average cost of a four-year post-secondary degree will be about $111,698 with residence and $55,548 without residence. 1 When surveyed by Canada Life, Canadians estimated it would likely cost about $55,070.
“An advisor can assist in opening a RESP and help you maximize all of its benefits,” said Orlander. “Every Canadian has their own unique needs, and an advisor can help you every step of the way – you don’t have to figure it out alone. They can provide you with tailored advice and a plan that works for you.”
Orlander notes that there are several benefits parents – or anyone contributing to a RESP – will see when they maximize their investments:
- It’s not just for tuition: The money can be used towards more than just tuition costs – including books, living expenses, other course materials and more.
- Grow savings tax-free: When the money is withdrawn for post-secondary education, your own contributions will not be taxed. But grants and growthOpens in a new window - Opens in a new window that accumulated inside the plan are taxed at the student’s rate. However, students that have little or no other income, can usually withdraw the money tax-free.
- Contribution matching: Receive up to $500 per year for a lifetime total of $7,200 per child from the government under the Canadian Education Savings Grant.
- Start saving early: Parents, guardians, grandparents, relatives can open a RESP to help the children in their lives save for post-secondary education from a young age. The key to success with this type of plan is to open an account and start saving early.
For more information on finding the right investment options for you, visit canadalife.com/investing.
These are the findings of a study conducted by Canada Life from August 3 – 9, 2021, with an online sample of n=1,510 Canadian adults who are members of the Angus Reid Forum. The margin of error for a probability sample size of 1,501 is ± 2.5% 19 times out of 20.
1 Knowledge First Financial, Projected Costs of a Four-Year Program, https://knowledgefirstfinancial.ca/learn-about-resps/future-education-costs.aspx - Opens in a new window
About The Canada Life Assurance Company
Canada Life is a leading insurance, wealth management and benefits provider focused on improving the financial, physical and mental well-being of Canadians. For more than 170 years, individuals, families and business owners across Canada have trusted us to provide sound guidance and deliver on the promises we’ve made.
On January 1, 2020, Great-West Life, London Life and Canada Life became one company – Canada Life, and today, we proudly serve more than 12 million customer relationships from coast to coast to coast.
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