What comes to mind is that Chinese proverb: “The best time to plant a tree was 50 years ago, the second best time is today”
So, if you have children and you haven’t started planning, start now. The longer you wait, the fewer the funding options and the less time you’ll have for contributions, investment growth and compounding. Fortunately, Canada’s prime funding program, the Registered Retirement Savings Program (RESP) includes carry-over provisions for late starters to still build a significant fund, within strict rules.
For annual RESP contributions up to $2,500, the government provides the Canada Education Savings Grant (CESG) of 20% or $500. If you cannot contribute your target amount every year, you can carry unclaimed CESG to the future, one year at a time, for a maximum CESG of $1,000 received annually.
The lifetime maximum CESG each beneficiary/child can receive is $7,200. Combining these 2 limits – age 10 is the latest to start an RESP to receive the maximum $7,200 of CESG. The other key age is 14. If you want to be eligible to receive CESG when the beneficiary is 16 and 17, before their 15th birthday, you must have: a) opened an RESP and b) contributed a total of $2,000 or at least $100/year for the previous 4 years.
Funding sources such as loans, scholarships and bursaries can be pursued during your student’s last year of high school, but the system rewards planning ahead. Rising costs make it even more important to plan ahead and to develop multiple funding streams.