Sixty percent of Canadian parents with children under 25 have saved less for retirement than they had planned because they have used some of their retirement savings for their child’s education, according to a 2013 CIBC poll.
As a result, 36% will actually delay retirement. And one-third has incurred additional debt to help their kids. Of those who are delaying retirement, 19% plan to do so by five or more years and 16% by one to four years.
“The expenses associated with a child’s education often come when parents are in their 40s and 50s and are looking to accelerate retirement savings,” says Christina Kramer, executive vice-president, retail distribution and channel strategy, with CIBC. “This means some parents will need more working years to close the gap created by the costs of their child’s education.”
To manage education costs, parents need to have a plan and start saving early, according to CIBC. The bank recommends understanding one’s total financial picture. “Look at your debt management and savings plans, and ensure you have accounted for education savings,” CIBC advises.
Making sure that mortgage payments and other obligations do not prevent parents from saving is another suggestion.
Additionally, CIBC recommends the use of a registered education savings plan, which is a source of tax-deferred income and provides access to the Canada Education Savings Grant.
The survey polled 1,000 Canadians this summer.
A version of this story originally appeared on our sister publication, Advisor.ca
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