What actually changes
Helping a grandchild through school is one of the few financial gifts that comes with a government bonus attached. Money that would otherwise sit in your savings can go into an RESP, collect a 20% match and grow tax-sheltered for a decade or more before it is needed.
For your own plan, the helpful thing to understand is that RESP contributions are a cash-flow decision, not an investment reshuffle. The money leaves your household and belongs to the grandchild's education from then on. It does not change your retirement projection in any other way. What your plan needs to answer is simply whether the outflow fits, year after year, alongside everything else your savings are doing.
The other change is that you are no longer planning alone. If the parents also have an RESP going, the family shares one set of per-child limits, and the friendliest thing generous grandparents can do is coordinate before contributing rather than apologize after.
What the rules say
Anyone can open an RESP for a child, including grandparents. The person who opens it is called the subscriber, and the account can even run alongside a separate RESP the parents hold for the same child.
The Canada Education Savings Grant is the engine. The government adds 20 cents for every dollar contributed, up to $500 of grant per child per year, with a lifetime maximum of $7,200 in grant per child. That is why $2,500 a year is the number families circle: it earns the full $500 every year without leaving grant on the table. If past years were missed, unused grant room carries forward, so a later start can still catch up. Lower-income families may also qualify for extra amounts through the income-tested Additional CESG and the Canada Learning Bond, which exist alongside the basic grant.
The limits are per child, not per account. Each child has a $50,000 lifetime contribution limit shared across every RESP opened in their name, and contributions above it face penalties. This is the coordination point: if you and the parents both contribute, someone needs to be keeping one combined tally.
If a grandchild ultimately does not pursue education after high school, the RESP unwinds in an orderly if unglamorous way. The grants go back to the government, your contributions come back to you tax-free and the accumulated growth is taxable to you with an extra penalty tax, unless you have RRSP room to roll it into. Family plans can also redirect money toward a sibling. It is a real consideration, but with several grandchildren and many years of runway, it is rarely a reason not to start.
What grandparents in this situation weigh
The grant math is settled. The choices left are about structure and family dynamics.
- Opening your own RESP or giving the parents money to contribute: your own account keeps you in control of the money, while funding the parents' plan is simpler and keeps one tally of the limits. Both routes earn the same grant.
- How much per year: $2,500 per child captures the full $500 grant. More than that grows tax-sheltered but earns no extra grant, so some families contribute the grant-earning amount and hold the rest back.
- Catching up or starting fresh: carry-forward means a grandchild who is already eight or ten is not a lost cause. Later starts leave less time for compounding, but the grant room is still there to collect.
- Fairness across grandchildren: equal annual contributions per child is the common pattern, and it is easier to sustain if the total fits your plan in the expensive years when several grandchildren overlap.
- What school actually costs: living at home and going away are very different bills. A target that distinguishes the two keeps the goal honest.
A worked example
Len, 64, opens RESPs for his two grandchildren, ages 1 and 3, at $2,500 per child per year. Each contribution earns the full 20% match, $500 per child per year. Kept up, each child reaches the $7,200 lifetime grant cap partway through year fifteen, with $7,000 collected after fourteen years and the final $200 after that. By then Len has contributed $36,000 per child, comfortably inside the $50,000 limit, and every dollar of grant and growth has been compounding tax-sheltered. His plan then compares each projected balance against what school might cost, roughly $12,000 a year living at home or $25,000 a year away, both assumptions he can edit.
Projected with the same RESP contribution, grant and cost rules the TruePath engine applies.
How TruePath fits in
TruePath includes a full RESP planner. It models your contributions, applies the 20% grant with carry-forward for missed years, respects the per-child grant and contribution limits and grows the balance tax-sheltered, then shows whether the projected total covers projected costs using editable assumptions of roughly $12,000 a year living at home and $25,000 a year away. A pre-built scenario opens RESPs for your grandchildren at $2,500 a year each, so you can see what the commitment does to your own plan before you make it. On your side of the ledger, the contributions are treated as cash leaving your household, which is exactly what they are. The income-tested Additional CESG and Canada Learning Bond are not modelled.
Related questions people ask
Can a grandparent open an RESP?
Yes. Any adult can be the subscriber on an RESP for a child, and a grandparent's account can exist alongside the parents' RESP for the same grandchild. The per-child limits are shared across all accounts, so coordinating with the parents matters.
Why do people contribute $2,500 a year?
Because the grant is 20% of contributions up to $500 per child per year, and $2,500 is exactly the amount that earns the full $500. Contributions beyond that still grow tax-sheltered but attract no additional grant that year.
What if we started late?
Unused grant room carries forward. A child who has collected little or no CESG so far can still work toward the $7,200 lifetime maximum, and contributing more than $2,500 in a year can claim grant from missed years. Less time to compound, but the grant money is still on the table.
What happens if my grandchild does not go on to school?
The grants are returned to the government, your contributions come back to you tax-free and the growth is taxable to you with a penalty unless it can be rolled into your available RRSP room. Family plans can also shift money to a sibling who does continue studying.
Do RESP contributions hurt my own retirement plan?
Only as cash flow. The contributions leave your household, so your plan needs to absorb that outflow, but nothing else about your retirement projection changes. Testing the annual amount inside your plan shows whether the generosity fits comfortably.
Sources
This page is general education about Canadian retirement rules, not personalised financial advice. Figures are for the 2026 tax year and change with government updates.