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"Scugog's Community Newspaper of Choice" Post-secondary education costs a scary reality for most parents A recent national sur- vey found that 82 per cent of parents with children eight years and under are concerned about their ability to pay for their children's post-secondary education. The survey also showed they are missing important ways to allevi- ate that concern. It's daunting to think that if you have a baby now, you'll have to have more than $65,000 to pay for his or her education in 18 years. And that's just for one child. The Canadian Federation of Students budgeted $8,890 for tuition, books, rent and food for a year of uni- versity in 1995-96. Assuming an inflation rate of 3 per cent, a four- year undergraduate pro- available. Youngsters should consider filing tax returns as soon as they obtain their first part-time jobs - even if they are not taxable. Here's why: income earned from part-time jobs is earned income for RRSP purposes. For example, a student who has a part- time job and earns $4,000 per year from age 16 through 21 will accumulate an RRSP deduction limit of $4,320 by the time he or she graduates from university! This provides additional tax- saving options that would not otherwise be L_ SCUGOG FINANCIAL _ SERVICES INC. ® Annual Rates e GIC RRSP 1 YEAR.................... 2 YEAR .....oconvisronsnse 3 YEAR.................... 4 YEAR.................... 5 YEAR.................... 30 DAYS cashaBLE $5,000 minimum ea.cese ..4.55%...... 4.500% -.4.75%...... ..4.85%......4.750% ..4.90%...... 4.825% ..5.00%......5.000% -.4.20% Rates subject to change without notice "Serving Scugog For Over 15 Years" 250 Queen Street, Port Perry 905-985-3832 (next to Shoppers Drug Man) __ SHEPHERD & POWELL _] ---- CHARTERED ACCOUNTANTS ---- Accounting, Income Tax, Financial and Estate Planning & Consulting Services INDIVIDUALS « BUSINESSES ¢ FARMS TAX E-Filing" at No Extra Charge RETURNS Assistance in filing Government Forms and Returns New Business Planning and Startup PREPARED Evening and Weekend Appointments available FREE INITIAL CONSULTATION Personal. Confidential Service DAVID R. POWELL, B.COMM., M.B.A,, C.A., CFP 250 Queen Street, Port Perry 985-9791 (next to Shoppers Drug Mart) am in 2014 will cost over 65,000. The survey of 1,500 Canadian adults, conduct- ed by the Angus Reid Group found that 35 per cent of parents plan to pay for their children's education when their chil- dren actually get to school. That's an expensive option. Even a dual- income family earning $75,000 has only $52,600 left after taxes. That may explain why only 25 per cent of parents with chil- dren attending university now are actually paying their education bill. An additional 33 per cent are relying on savings accounts to build educa- tion funds, the survey found. People don't under- stand that saving is not the same as investing. It'll take a long time to reach $65,000 using a savings account. Saving is accu- mulating money, but investing is putting your money to work for you so that it grows over the long term. The survey revealed that 14 per cent of parents are using Registered Education Savings Plans (RESPs). While they are useful for putting money aside, RESPs can be inflexible. Only 12 per cent spoke to a financial advisor about saving for their children's education, and it's through advisors that parents can learn about in-trust accounts - one of the financial world's best kept secrets. More than half of the respon- dents (53 per cent) have never sought any type of financial or investment advice on this issue. Almost everyone can afford to send their chil- dren to college or univer- sity - it's a matter of know- ing your options. If you have a child today, we cal- culate you can pay either $10,200, $21,600, $65,000 or $133,000 for his or her education. The best option is putting $10,200 into an equity mutual fund earn- ing a 10 per cent average annual compounding rate of return when your child is born and letting it grow for 21 years. But not all parents are in a position to make a lump sum investment when their children are born. A sec- ond option is to make $100 monthly contributions to the same mutual fund for 18 years. The money will continue to grow for an additional three years to cover the cost of your child's education. Alternatively, you can pay the full $65,000 when they attend school, or take out loans which - assuming a 9 per cent interest rate and $7,500 annual pay- ments - will take 18 years to pay back and cost $133,000. For most people, it will eome down to a trade-off between giving your kids toys and other luxuries now or a debt- free education later. Invest in your chil- dren's future today. Call your independent finan- cial advisor. The above article is for information purposes only and should not be con- strued as offering tax advice. Individuals should consult with their personal tax advisors before taking any action based upon information contained in this article. This article was supplied by RBC Dominion Securities Investment Advisor Bob Gow. For more information, please call 434-7156. RBC Dominion Securities is a member of the Canadian Investor Protection Fund. Share the wealth, save on your taxes Married couples can save as much as 33 per cent in combined income taxes With our progressive tax system in Canada, the higher your income, the more you pay in taxes. However, married couples may be able to save as much as 33 per cent in combined income taxes through income splitting. Following is an example Personal Wealth Management™ Education Savings Plans The Smart Way to Talk with Investment Advisor RBC DOMINION 434-7156 or 1-800-267-1522 SECURITIES 111 Simcoe St. N., Oshawa, ON LIG 454 Save! Robert J. Gow Member CIPF CHARTERED Van Camp & Keller ACCOUNTANTS of how beneficial income splitting can be: Couple A has retire- ment income of $70,000 received by one partner only. Couple B has retire- ment income of $70,000 split between two partners receiving $35,000 each. At the end of the year, Couple A would have paid $20,563 in income taxes, while Couple B would have paid only $13,873: a saving of almost 33 per cent (using 1998 tax rates). The ideal split would be one where each partner reports the same income during retirement. Income tax planning and return preparations ® Personal tax returns electronically filed e Financial, estate and retirement planning Personal Tax Returns are being processed now. OFFICE HOURS UNTIL APRIL 30. Monday to Friday 8-6, Saturday 9-1 204 Casimir Street, Port Perry, Ont. LOL 1B7 (905) 985-9725 « Toll Free 1-800-215-3852 Although this may be dif- ficult to achieve, the more you are able to share with . your spouse, the better. One of the best tools avail- able for income splitting is the spousal RRSP. A spousal RRSP is simply an RRSP registered in the name of one spouse with the contribution slip going to the other. Use of the spousal RRSP allows the higher income spouse to get the benefit of the large tax refund while the lower income spouse will be able to withdraw the funds at retirement. In order to take advantage of the spousal option you must plan in advance since you cannot transfer funds between RRSP plans. You may also be able to con- tribute to a spousal RRSP beyond age 69 if your spouse is younger. Other income splitting techniques are available bu often carry restric- tions. Whatever income splitting strategy you use, be sure to consult your financial professional who can help you identify options and then decide which strategy is best in your particular situation. There are rewards for those who plan ahead. Are you missing the opportu- nity for a 33 per cent income tax savings? Courtesy of, John Walhout, CMA Balanced Planning Financial Group,