Living in retirement: The cost of helping my kid graduate debt-free

Posted by Ravi Gulati | Posted in Financial Planning, News of Interest | Posted on 15-12-2013

Although my daughter will leave undergraduate training without a penny in debt, it took a village to get her there – including me, her father and my generous brother, who has been willing to step up when finances grew thin. She’s worked every summer to help with expenses. But her work and the registered education savings plan (RESP), which I began contributing to when she was two, would not have been enough to get her through her undergraduate degree.

In 2008, when she was sixteen, I lost a hefty portion of her RESP portfolio. What was $34,000 before the Great Recession became about $25,000. A few years earlier, mutual fund fees were killing me so I switched to equities rather than a low-return bond fund. I was foolishly trying to realize some quick profits before sending my daughter to university. It didn’t work.

I’d switched the RESP into blue-chip equities, but it couldn’t withstand the crash of 2008. In the fall after the crash, I returned the remaining $25,000 to a secure bond fund with lower fees than the original fund and I watched the big dip of the summer of 2010 determined to stay this cautious course. Between 2008 and this fall, the fund had accrued less than 1.5 per cent in profit, after fees.

Last year the average tuition for university in Canada reached $5,581. In my experience it costs another $10,000 to $12,000 for living expenses. It’s expensive, but I want my daughter to have the same opportunities offered to me. Still, these are not small amounts and it quickly dawned on me that the retirement plans that I’d made based on my college pension and my RRSP would need to be revised. This year, I’m teaching at two campuses, writing a proposal for a non-fiction book and leading a writers’ workshop in France in the spring.

Living in retirement: The cost of helping my kid graduate debt-free – The Globe and Mail.