TORONTO, Dec. 23, 2013 /CNW/ - If you are still looking for the perfect present for grandchildren who have all the toys their closets can hold, the gift of higher education can be the ideal "extra" under the tree, according to RBC.
"Tucking even a small amount of money into an RESP (Registered Education Savings Plan) for a grandchild this holiday season or on other special occasions can truly become the gift that keeps on giving," advised Janet Brick, manager of RESP initiatives at RBC. "Your grandchild can benefit in two ways: your gift of course, plus government funding, such as the Canada Education Savings Grant, which helps an RESP grow even faster."
An RBC poll earlier this year showed that, while two-thirds (63 per cent) of young families (those with children who are 12 years old or younger) have RESPs, fully one quarter (25 per cent) of these families are contributing $200 or less a year to their RESPs, due to other financial commitments.
"We know that parents with young families are trying to cope with a number of competing financial demands and RESPs are just one more way they are trying to do what is right for their children," added Brick. "Gifts from other family members and friends can help parents take better advantage of grants to maximize their RESPs for their children to use for their post-secondary education."RBC 2013 RESP Poll Fast Facts
- Through the Canada Education Savings Grant, the federal government matches 20 per cent of RESP contributions yearly, up to an annual maximum of $500 per child, for a potential total of $7,200 by the time the child reaches the age of 18.
- On average, young Canadian families who have RESPs are contributing just under $1,500 per year to them:
- One quarter (25 per cent) are contributing $200 or less each year
- A further one-in-three (29 percent) contribute up to $1,000 each year
- RESPs are opened, on average, when a child is 2 years old.
- While parents believe that, on average, their RESP will be worth almost $28,500 when needed by their child/ren, typically contributions total only $22,500 by the time a child is 17 (for RESPs started at age 2).