The poll found that more than one-third of Canadian parents with children under the age of 25 will have to delay retirement because of the cost of helping their children pay for their education. Many parents have saved less for retirement than they originally planned, and some have taken on additional debt to help pay for tuition and other expenses.
Key findings of the poll include:
- Sixty percent of Canadian parents with children under 25 have saved less for retirement than they had planned for, because they have directed some of their retirement savings towards their child’s education instead;
- One-third (33%) have incurred additional debt in helping their children finance their education or with other needs; and
- As a result of these factors, 36% of Canadian parents with children under the age of 25 said they will need to delay their own retirement—19% by five or more years, and 16% by one to four years.
“Many Canadians are focused on building retirement savings or reducing debt, but the costs you can incur when helping your children with college or university can impact both of those goals,” said Christina Kramer, executive vice president, Retail Distribution and Channel Strategy, CIBC. “The expenses associated with a child’s education often come when parents are in their 40s and 50s, and are looking to accelerate retirement savings. This means some parents will need more working years to close the gap created by the costs of their child’s education.”
At the start of 2013, paying down debt was named the top financial priority for Canadians for a third year in a row. “It can be a challenge for parents who are trying to turn the corner on their own debt to borrow more to help pay tuition bills, which is why it’s so important to talk to an adviser and build education costs into your long term plan when you still have time on your side to save and pay down other debts,” Kramer noted.
She added that having a financial plan is critical. In order to achieve the goal of helping their children with their education, Kramer recommended that parents:
- Understand the total financial picture, working with a financial adviser to look at debt management and savings plans, and to ensure education savings have been accounted for; and
- Manage debt effectively, ensuring that mortgage payment and other obligations give them room to allocate money towards savings, making it easier to find the money that will need to be put away each month.
“Saving for your child’s education is just like saving for your retirement. The sooner you start, the more time you’ll have, and the more manageable your monthly contribution will be,” concluded Kramer.
The poll was conducted online by Leger, for CIBC, and surveyed 1,000 Canadians. Polling was conducted between June 9 and June 12, 2013.
For more information, please visit the CIBC website at http://www.cibc.com.