Should parents dip into their savings to help adult kids?

In this video, Lise Andreana and Rob Carrick of The Globe And Mail answer questions about parents using their savings to help their adult children.

Lise explains the financial drawbacks of moms and dads helping their kids with a house down payment, and with basic living costs.

The 'Sandwich Generation' faces a financial squeeze

See video of Lise Andreana speaking with Rob Carrick of The Globe And Mail about the financial squeeze facing the 'sandwich generation.'

As Lise and Rob explain, this is the generation of people who are helping their adult children become financially independent, while also helping their aging parents with their financial needs.

The Cost of Caring for Aging Parents

In this video, Lise Andreana talks to Rob Carrick of The Globe And Mail about the cost of caring for aging parents.

Lise explains that in Canada medical costs are likely not the primary expense. Rather, the focus is on the time and effort parents will need as they age, and the impact this has on their adult children’s earnings.

7 tips to help you maximize your child’s RESP

1.      Start contributions early

• You can open an RESP as soon as your child has a SIN number. This can be applied for just after birth and many of our clients start their child’s plan around 2 months of age. 

2.      Make contributions regularly 

• Prepare for your child’s education by contributing monthly to an RESP. A little goes a long way. Even if you start off small (around $25 a month) it adds up over time.
• Regular contributions help smooth market fluctuations.
• Anyone can contribute to an RESP – a child’s parents, grandparents, aunts and uncles, or close family friends who may be able to contribute if you can’t right now. 

3.      Take advantage of the considerable benefits

• The federal government adds to your contribution up to a maximum of $500 per year, per child.  This is the Canada Education Savings Grant (CESG) and it is payable up to the year your child turns 17. For a full explanation of eligibility requirements, see the Government of Canada's CanLearn website.
• As long as your contributions remain in the plan they continue to gain interest income and are not taxed.
• RESPs are taxed in the hands of the student who uses them, so the tax rate is typically low.
• Flexibility of withdrawals: it’s up to you to decide how much money you withdraw and when. Withdrawals can be used for everything from tuition and books to living expenses.
• Family Plans are a great way to pool education funds for families with more than one child.

 4.      Plan early 

• Your child may be in diapers or just starting school but planning early for their education is the best route.
• We recommend, as a start, to take the monthly $100 Child Care Tax Benefit (for children under the age of 6) from the government, and put it straight into their RESP.  When you do this right away, from birth, you can come close to funding a good portion of your child’s education, completely funded by the government. If you can’t afford to use the entire $100 for an RESP contribution, something is better than nothing. Even $25 a month is a good start.
• If your child is under 17 it’s not too late to open an RESP

 5.      Don’t worry – RESPs cover a widerange of post-secondary options

•  Traditional college or university
• Technical or vocational school
• Typically all you need is proof of enrollment in a qualifying program.

6.      Really don’t worry – there are four options available to you if your child does not pursue post-secondary education 

• Leave the money in the RESP for future use.
• Replace the beneficiary with another child.
• Transfer the money to your RRSP.
• Close the RESP and withdraw the money. Any grants will have to be returned to the government.

7.      Team work – Personal Saving and Government Contributions 

• Don’t leave money on the table. Some people have enough money set aside for their child’s education without having to contribute to an RESP. Make sure to examine all the benefits of an RESP: See tip # 3.

RESPs are highly underused in Canada. Be sure to start early to maximize the benefits of compounding growth, government grants and tax sheltered savings. If you have questions about how an RESP works, or how an RESP fits into your overall financial plan, contact us.

The Benefits of Fee-For-Service

In this video, Peter Andreana explains how the Fee-For-Service approach to wealth management and investing provides many advantages for clients of Continuum II Inc.

Find out the positive impact this approach can have on your bottom line in this short video.

Peter also explains how he outlines the pros and cons of investment decisions to his clients and finds the "happy medium" for their financial plan.