Tax-free education savings: The ABCs of RESPs + MORE May 31st

RESPs are a tax-free vehicle for your child’s education funds that also qualify for the Canada Education Savings Grant.

The experts promised us a “barnburner” of a first quarter for Canada’s economy, and the economy delivered.

Canada’s GDP grew at a 3.7-per-cent pace in the first three months of 2017, more than tripling the U.S.’s 1.2-per-cent pace, StatsCan reported on Wednesday.

“Wasn’t it America that was supposed to be made great again? And yet boring old Canada was a first quarter pace of growth that more than tripled what was seen for the U.S. ,” commented TD Bank senior economist Brian DePratto.

DePratto noted that, with this quarter’s results, Canada has seen the fastest pace of economic expansion since 2010, when the country was recovering from the global financial crisis.

Household spending was one of the largest contributors to growth this quarter, increasing at a 4.3-per-cent pace. Auto sales were particularly strong.

But, as CIBC economist Avery Shenfeld noted, consumers’ savings dropped at the same time, suggesting Canadians spent their savings and went further into debt to consume this quarter — a reality that can’t continue forever…

RESPs are a tax-free vehicle for your child’s education funds that also qualify for the Canada Education Savings Grant.

Q: My husband is 65 and will soon be “paid off” to retire. The reason he’s still working is because we still have a sizable credit line debt of $50,000. (no mortgage or credit card debt). My husband will have a healthy DC pension that could pay us about $25,000 a year if we buy an annuity. As all the experts say you shouldn’t retire with debt, I was thinking of taking out the amount we owe from my small private pension and paying off the debt. I know that I will be hit with taxes but at least we will be debt-free. What is your opinion on this?
— Judy M.
A: Paying off debt is an effective part of your overall retirement readiness although it doesn’t have to be absolute. In today’s low-interest environment, servicing debt is quite cheap so paying extra tax unnecessarily may be more expensive than the debt interest payments.
Start by ensuring you are paying the lowest interest rate available. Taking out a Home Equity Line of Credit (HELOC) will reduce your interest rate to 3…