Saving for your children's education requires a long-term plan. And, like saving
for retirement, the earlier you start your plan the better. Use this calculator
to help develop or fine tune your education savings plan.
Definitions
- Age of children
-
Current age of your children. This calculator is based on each child beginning their
college education at age 18. The difference between their current age and 18 is
the number of years you have to save.
- Annual tuition and books
-
Current estimated cost of one year of tuition and books. This amount should be per
child and be specific to the school they may be interested in attending. For the
purposes of this calculator all expenses are assumed to be due at the end of the
year.
- Living expenses
-
Current estimated cost of one year living expenses. Like tuition and books, this
amount should be per child and specific to the school they may be interested in
attending. For the purposes of this calculator all expenses are assumed to be due
at the end of the year.
- Education cost inflation
-
This is the percentage that you expect educational costs to increase per year.
- Current savings
-
The total amount you currently have saved for your child's (or children's) education.
- Monthly contribution
-
The amount you plan to save per month toward your child's (or children's) education.
This calculator assumes that all contributions are made at the beginning of each
month.
- Registered Education Savings Plan (RESP)
-
Check this box if you wish to calculate your savings with a Registered Education
Savings Plan (RESP). There are two advantages to using an RESP to save for your
children's education. First, the money grows tax free until the child needs it for
tuition, residence and other educational expenses. Second, you receive a Canada
Education Savings Grant worth as much as $600 per year per child. The grant amounts
are calculated as follows:
|
Income Range
|
Annual Grant Calculated As
|
|
$0 - $37,885*
|
$0.40 for each $1 for the first $500.
$0.20 for each $1 for the next $1500.
Maximum annual grant is $600
|
|
$37,886* - $75,769 *
|
$0.30 for each $1 for the first $500.
$0.20 for each $1 until you reach the maximum grant.
Maximum annual grant is $550
|
|
over $75769 *
|
$0.20 for each $1 for the first $2500.
Maximum annual grant is $500
|
*These amounts are adjusted annually for inflation. For additional information you
can visit http://www.hrsdc.gc.ca/en/learning/education_savings/public/cesg.shtml
Please note that for the purposes of this calculator, taxation is not factored into
the results. This calculator assumes that 1/12 of your annual RESP grant is added
to your savings each month along with your normal contribution.
You are limited to a total of $50,000 in contributions to an RESP per child, but
there is no annual limit. You may contribute the entire $50,000 contribution in
one year if you have the means or a windfall. Lifetime grants to an RESP are limited
to $7200 per child. The grant amount you receive does not reduce your contribution
limit to an RESP. For more information on RESPs please see: http://www.hrsdc.gc.ca/en/hip/lld/cesg/publicsection/glossary.shtml
- Rate of return
-
The annual percentage rate you expect to earn on your educational savings. Please
use a realistic rate. Consult an investment professional for an appropriate rate
of return. You may wish to use a more conservative rate of return if your child
is within 10 years of enrolling in school. This calculator compounds all growth
annually. For the purposes of this calculator taxation is not factored into the
results. If you pay taxes on the interest, dividends or capital gains from these
investments you may wish to enter your after tax rate of return.
