本帖最后由 liujuan 于 2012-9-15 19:27 编辑
Higher education for kids means later retirement for mom Situation: Recently divorced womanhas inadequate funds for family goals Strategy: Divert savings to kids’RESPs, postpone early retirement Solution: A secure but more modestretirement at 65 Can a singlemom raise and educate three teenagers in B.C. on an average income and thenretire in comfort at 60? That’s thedilemma of a woman we’ll call Patricia, 52, who brings home $4,282 a month froma local government job and adds $800 in rent and $975 in child support fortotal monthly cash flow of $6,057. The rental payments, which are from aforeign student who boards with Patricia and her children, are so far only forthe school year from September to June. Patricia is farfrom financially strapped, for she has a net worth of approximately $611,600.But she is committed to supporting her children through university before sheretires — at 60 perhaps, when her youngest finishes a four-year universitycourse, or as late as 65 if necessary. Patricia is carrying the weight of herfamily and her own future. It’s a lot of responsibility Her eldestchild, 18, begins university next year. Next comes a 16-year-old, then theyoungest, 14. For now, thereis $29,000 in their family’s RESPs. Patricia hasn’t been making additionalcontributions and her ex-husband is unwilling to support the education fund.Had the means been available and this family had been able to take fulladvantage of the RESPs by contributing $2,500 a year for each child, the CanadaEducation Savings would have chipped in with a 20% bonus of $500 a year. But with thatunderfunded savings, the costs of educating her small brood could putPatricia’s retirement in jeopardy. She will have less on which to retire orwill have to work more years. There is no alternative, for her income is notlikely to rise substantially nor her costs, especially of debt service, to fallvery much. The averagecost of a university education in Canada in 2011, according to StatisticsCanada, was $5,138 a year plus $702 in compulsory fees. We can round it up to$6,000 a year. That’s a total bill of $72,000 for three kids each in universityfor four years. That leaves $43,000 to be paid before Patricia can retire. Patricia iscarrying the weight of her family and her own future. It’s a lot ofresponsibility. “I havepurchased a home for stability for the children and feel confident of myability to meet the payments,” Patricia says. “My goals are to see the kidsthrough university, then retire and maybe try to live the snowbird lifestyle.” Family Financeasked Adrian Mastracci, a portfolio manager and financial planner who heads KCMWealth Management Inc. in Vancouver, to work with Patricia. Related
“This is a tough case,” he says. “Patriciawants to pay down the mortgage, help the kids pay university costs and thenhave a retirement income of $72,000 before tax at age 60. That income, aftertax, would keep her on a level field with current expenses.” Patriciaalready has a $369,000 mortgage and saves sporadically. The mortgage costs$1,368 a month, or $1,568 including property taxes. The $1,568 sum is 37% ofher take-home pay. Therefore, foruniversity costs, she can suggest her kids get student loans. She might alsoask her own healthy parents, who may leave her and her kids with a substantialinheritance, to help with tuition costs. She should also encourage her childrento apply for scholarships, grants and bursaries. They all have summer jobs andwill contribute to tuition and other university costs. Downsizing thehouse, a final alternative, would be a poor choice, especially if the kids liveat home to save university costs, Mr. Mastracci says. Enhancing savings There are some things Patricia can do to boost savings orlower costs. She could extend her mortgage amortization by five or six years,but such a move would increase her leverage and exposure to interest-rateincreases. She could also borrow against her home’s equity for the RESPs, whichis much the same thing with the same risks. The mostrealistic course for Patricia is to pay down the mortgage and lower herretirement income expectation to her $30,300 annual employment pension plus$11,840 Canada Pension Plan benefits at age 65 and $6,540 Old Age Security atage 67. Her RRSP, if shemakes no other contributions, could grow at 3% after inflation to $123,500 andthen pay $3,700 a year. That would push her total retirement income to $52,380,or $47,142 a year ($3,930 a month) after 10% average income tax. Retirementbefore 65 would impair her savings growth, could force her to dip into capital,and require her to take a cut of 0.6% per month, or 7.2% per year, for eachmonth prior to age 65 that she begins CPP benefits. She can’tafford those cuts if she wants to maintain her present way of life inretirement, the planner says. In retirement,she will have to trim present expenses by $2,100 a month to get by on herincome. By then, with her food bill slashed by several hundred dollars a month,kids’ activities expenses ended and other costs trimmed, she will be able toclose the gap, the planner says. “It will be tight, but she can make the planwork,” Mr. Mastracci says.
What is not in the offing is the snowbird plan. “There is nomoney for her wish to be a snowbird,” Mr. Mastracci says. “Patricia’s best betis to make the most of what she has, trim expenses, get the kids throughuniversity and then accept that her retirement is going to be secure but farfrom what she had in mind.”
following related to tuition costs from Statistics Canada for your reference. Hopefully, you can get some ideas about the tutition cost by the time your child starts enrolling a university or college.
Enjoy it!
Thanks for your attention!
Satomi Fumitsuki (刘 娟)
Senior Financial Consultant
Tel: 519-221-9371
Fax: 519-894-8704
Email: satomifumitsuki@gmail.com
Web: www.goldenmaplefinancial.ca
Take Best Care of Your Financial Health!
| 
IP卡
狗仔卡
发表于 2012-9-15 19:06:05
提升卡
置顶卡
沉默卡
喧嚣卡
变色卡
显身卡