theglobeandmail.com
Saving for Children's Future Beyond RESPs: Strategies and Challenges
The article explores alternative savings vehicles for children's future beyond RESPs, considering TFSAs, non-registered accounts, formal and informal trusts, and life insurance, weighing their benefits and drawbacks.
- What are the key advantages and disadvantages of using parental TFSAs or non-registered accounts for children's savings?
- Parental TFSAs offer tax-free growth but consume parental contribution room. Non-registered accounts are easily accessible, posing a risk of parental spending. Both lack the inherent inaccessibility of RESPs or RRSPs, which helps prevent premature withdrawals.
- What are the long-term implications and considerations of using formal trusts or life insurance for children's financial future?
- Formal trusts provide strong protection against premature access but involve administrative costs and annual tax filings. Life insurance policies build cash value but have high premiums and complex structures. Both require careful planning and understanding of associated complexities.
- What are the most suitable alternative savings vehicles for children's future beyond Registered Education Savings Plans (RESPs)?
- Beyond RESPs, options include parental TFSAs, non-registered savings accounts, and formal or informal trusts. Each offers varying degrees of accessibility and tax implications. Life insurance policies offering cash value are another possibility.
Cognitive Concepts
Framing Bias
The article presents a balanced view of various savings options for children's future education and other goals, including RESPs, TFSAs, non-registered savings accounts, and trusts. It presents the opinions of a financial planner, but also acknowledges potential drawbacks of each option. The framing is informative and doesn't appear to favor any particular method.
Language Bias
The language used is generally neutral and objective. The author uses terms like "bullish" to describe the financial planner's opinion, but this is presented as a quote and doesn't seem overly biased.
Bias by Omission
The article focuses on savings vehicles available in Canada. It might benefit from mentioning alternatives available in other countries or discussing potential tax implications in more detail depending on the reader's location. However, given the article focuses on a Canadian audience, this omission is not significant.
Sustainable Development Goals
The article centers on saving for children's post-secondary education, directly aligning with SDG 4 (Quality Education) which aims to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. The discussion of RESPs, TFSAs, and other savings vehicles directly supports the goal of enabling children to access higher education.