TLDR
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Rising costs are squeezing parents with higher tuition and living expenses, making it harder to support kids’ education while also planning for retirement
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Delaying retirement savings is costly, as missed years of compounding can lead to higher contributions later in life and a delayed start to retirement
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Taking a balanced approach keeps RRSP contributions consistent while using RESPs to leverage potential grants
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A shared family approach works best – combining parental support student loans, scholarships and income from part-time and summer jobs
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Start by estimating how much to save for university in Canada, then decide how RESP contributions fit alongside RRSP goals
The mix of parental obligation and inflating costs are leaving many Canadian parents worried that they might have to forgo a comfortable retirement to save up enough money for their child’s education. In reality, most Canadian students rely on a mix of family support, loans, scholarships, and employment income. By prioritizing your own retirement savings, you protect your children from the future stress of having to support you financially.
Why Canadian parents are feeling the financial pressure
Canadian parents face a financial perfect storm, balancing soaring living costs and retirement needs with the added pressure of funding their children’s rising tuition. This collision of expenses creates an immense strain that can jeopardize both their current stability and future security. As of early 2026, the cumulative Consumer Price Index in Canada has risen 19.9 per cent over the past five years. Statistics Canada notes that tuition costs in Canada are also expected to rise in the 2025/2026 school year by an increase of 1.4 per cent for undergrads (up to $7,734) and 0.9 per cent for graduate students (up to $7,978). While the figures may look worrisome, there are options to help offset costs so that Canadian parents can help their children while also easing into a retirement plan.
The cost of delaying retirement contributions
When you delay your retirement contributions, you lose the exponential growth of compounding interest. This could force you to take on debt for basic expenses in retirement, or require you to find alternative income sources, such as working a job in retirement. Although retiring with debt is becoming more common, it’s a massive stressor for retirees and could also impact children later in life. The average Canadian household debt, not including mortgage, is nearly $41,500 with Canadians aged 46-55 owing the most money. This is a key age range when it comes to contributing to a retirement savings. Deprioritizing your retirement could lead to lost compound interest, which works best over a long-term period of growth.
How to save for post-secondary education while securing your own retirement
The key to saving for post-secondary education while securing your own retirement is by prioritizing Registered Retirement Savings Plan (RRSP) contributions, as retirement cannot be funded through student loans. Contributing small amounts consistently to a Registered Education Savings Plan (RESP) will ensure you can capture grants from the Canada Education Savings Grant (CESG) and benefit from compounding, and you can always adjust RESP contribution amounts as your income changes. Treat education savings as a shared family goal by using an RESP as part of a wider plan while prioritizing your own future financial security.
RESPs vs RRSPs
| Feature | RESP (Registered Education Savings Plan) | RRSP (Registered Retirement Savings Plan) |
| Goal | Save for child’s education | Save for retirement |
| Tax Benefit | • Contributions are not tax-deductible • Investment growth is tax-deferred • Contributions withdrawn tax-free • Withdrawals are taxed to the student | • Contributions are tax-deductible (reduces your taxable income) • Investment growth is tax-deferred • Withdrawals are taxed at income rate |
| Contribution Limits | $50,000 lifetime maximum per child | 18% of previous year’s earned income, up to annual limit |
| Government Incentives | • Canada Education Savings Grant (CESG) up to $7,200 lifetime maximum: • Canada Learning Bond (CLB) for eligible families | • Tax deduction that reduces your taxable income • Homes Buyers’ Plan withdrawal option |
| Withdrawal Timing | • Must be enrolled in qualifying post-secondary education • Plan ends after 35 years | • Can withdraw at any time (subject to withholding tax) • Must convert to RRIF or annuity at 71 |
Prioritizing investment plans
Diligence in your finance planning – like researching investment options – can prove pivotal in shaping your long-term goals. Remember that it’s never too late for mid-life financial planning and that a knowledgeable financial expert can examine your current investment portfolio to guide the way to retirement. When it comes to including a child’s tuition into your financial plans, be sure to involve the child as well.
Education is a team effort. By prioritizing your retirement now, you ensure you won’t be a financial burden later, while your children can take advantage of the many tools available – like grants, work-study and low-interest loans – that allow them to invest in their future at a manageable pace.
Practical steps to protecting your retirement and supporting your kids
Practical steps to protecting your retirement and supporting your kids should start by knowing how much of a financial undertaking it will be. Calculating the cost of your child’s post-secondary education can illuminate the reality of tuition costs as well as any hidden fees. Other considerations include where your child wants to study and their desired program, as it might involve having to pay to live in residence. A Master’s program could also mean more money– adding to a readjustment of finances. When you know how much your student will need, then you’ll be able to explore avenues of financing while keeping an open dialogue with your child.
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Explore financial options
Understanding and leveraging available options can help ensure that you will have enough money to build a financial safety net and help your child achieve their education goals. If your children can carry some of the costs of post-secondary education, they will have access to student loans and lines of credit that come with lower interest rates than most credit cards an older adult could access. In many cases, student credit lines require a parent (or another trusted adult) to co-sign as a guarantor. Student options also tend to have flexible repayment terms that consider a student’s income during and after school.
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Maximize retirement contributions
- Along with a carefully planned RRSP, other options investment options with varying degrees of risk and reward exist such Exchange-Traded Funds (ETF) and investment stocks that can help you achieve your retirement goals. Using vehicles such as a Tax-Free Savings Account (TFSA) can also help you grow your money.
Another massive help along the way to retirement is taking full advantage of an Employer Pension Match if available – a workplace benefit where employers contribute funds to an employee’s retirement plan. Employers will usually match a percentage of the employee’s salary or a portion of their contribution, acting as a salary boost. Working with a financial advisor can help you determine the best way to maximize your options.
- Along with a carefully planned RRSP, other options investment options with varying degrees of risk and reward exist such Exchange-Traded Funds (ETF) and investment stocks that can help you achieve your retirement goals. Using vehicles such as a Tax-Free Savings Account (TFSA) can also help you grow your money.
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Contribute to an RESP
- An Registered Education Savings Plan is a tax-sheltered plan specifically geared toward helping to save up for a child’s post-secondary education. Parents and loved ones can contribute to the RESP over the years so that when it’s time, the funds can be used for education – including trade schools, CEGEP and apprenticeship programs.
In addition to having contributions grow tax-free, the federal government will match said contributions through the CESG by 20 per cent on contributions of up to $2,500 every year. This means you can receive a maximum CESG contribution of $500 per year in your RESP (up to a lifetime maximum of $7,200). Find out more about how to invest in an RESP. -
Encourage children to explore scholarships, grants and working opportunities
Scholarships and grants can be a huge benefit in helping pay fees. As mentioned earlier, a CESG provides an incentive by paying a grant based on the amount contributed to an RESP. And while scholarships are typically based on merit, grants and bursaries are often awarded based on financial need or other considerations.
Paying a tuition doesn’t need to be a singular effort. Consider a matching program — i.e. if your child pays for the first term, you cover the second. Or you can match whatever dollar amount they can come up with to get to the total funds needed. This agreement can motivate your child to search for working opportunities that will benefit them in the future.
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Student Budget Calculator
Use this Student Budget Calculator to estimate how much money will be needed to pay for their entire school experience. Also encourage your child to speak with their guidance counsellor and/or financial aid office to see what else might be available.
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Have a well-meaning talk
Having an honest sit down with your kid can reinforce your plan of action. As a parent, you’re stuck between two opposing fears – one of burdening your child and a fear of being a burden later in life. A conversation would bring your child up to speed, giving them a voice, autonomy and normalizing partial support as responsible and not selfish.
FAQs
Both RRSPs and RESPs are advantageous but serve distinct roles. Whichever is better depends on your income, retirement progress and education goals.
If your child doesn’t pursue post-secondary education, you may be able to choose a new beneficiary. Alternatively, if your child chooses to wait, they’ll have 35 years to use the funds. If not, you would face the loss of government grants and potential penalties as set by your financial institution.
Yes, you can withdraw funds from your RRSP if they’re not in a locked in plan. However, they’ll be subject to tax penalties and will reduce your retirement savings.
As soon as possible – or as soon as the baby is born. This will give them over 18 plus years of tax-free growth in an RESP.
If your retirement savings are behind, you should generally prioritize them because there are many ways to fund an education (like loans and grants), but you cannot borrow for your own retirement. If you need to catch up on your RRSP contributions, you can do so while still giving small amounts to RESPs.
Final thoughts
Supporting your child doesn’t mean paying for everything. It means helping them start adulthood without sacrificing your own financial security. As far as any investment priorities plan goes, remain focused on a balance. You can both invest in your child’s future as well as your own retirement goals –whether it’s fun in the sun or helping with your kid’s late-night lab.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
