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retirement and rrsps

Graduating students.Thinkstock

Welcome to our Living in Retirement blog, where a recent retiree chronicles the ups and downs of her real-life retirement journey.

Becoming pregnant at the age of 40 was a momentously joyous event. Yet 22 years later, I realize I had no idea what a huge decision I was making.

During the early years I was constantly surprised by the dramatic changes in my daily life, but the true long-term financial implications of raising a child late in life weren't apparent to me until my daughter applied for university. She is a retirement baby.

Unlike the self-sacrificing grandparents who by choice or circumstance raise their grandchildren, women my age were among the first to choose to delay baby-making to the last moment. Today, it is increasingly common to see Boomers living in retirement and supporting children who are attending university.

Having come of age in the seventies, the women's movement opened up countless avenues for me. Faced with so many choices, I couldn't decide if I wanted children or not; if I wanted a big career or I wanted to stay home to raise kids. In the end, I did both.

My 22-year-old daughter will graduate in 2014 with a B.A. in theatre and film. She wishes to attend graduate school and I'm in accord. Why push her into an economy where there are so few jobs for her age group? Some might argue that if she'd pursued another discipline, she'd have a better chance of scoring a lucrative first job. But acting is her calling and I decided early on I wasn't going to be the kind of parent who squashes her child's dreams.

There's no denying that employment opportunities are bleak for students in the arts. According to Paul Kershaw, policy professor at the University of British Columbia, the typical 25-to-34 year old is now making wages that are 11 per cent lower than they were for the same person in 1976 – even though their education levels are higher.

Although my daughter will leave undergraduate training without a penny in debt, it took a village to get her there – including me, her father and my generous brother, who has been willing to step up when finances grew thin. She's worked every summer to help with expenses. But her work and the registered education savings plan (RESP), which I began contributing to when she was two, would not have been enough to get her through her undergraduate degree.

In 2008, when she was sixteen, I lost a hefty portion of her RESP portfolio. What was $34,000 before the Great Recession became about $25,000. A few years earlier, mutual fund fees were killing me so I switched to equities rather than a low-return bond fund. I was foolishly trying to realize some quick profits before sending my daughter to university. It didn't work.

I'd switched the RESP into blue-chip equities, but it couldn't withstand the crash of 2008. In the fall after the crash, I returned the remaining $25,000 to a secure bond fund with lower fees than the original fund and I watched the big dip of the summer of 2010 determined to stay this cautious course. Between 2008 and this fall, the fund had accrued less than 1.5 per cent in profit, after fees.

Last year the average tuition for university in Canada reached $5,581. In my experience it costs another $10,000 to $12,000 for living expenses. It's expensive, but I want my daughter to have the same opportunities offered to me. Still, these are not small amounts and it quickly dawned on me that the retirement plans that I'd made based on my college pension and my RRSP would need to be revised. This year, I'm teaching at two campuses, writing a proposal for a non-fiction book and leading a writers' workshop in France in the spring.

Next year when my daughter asks me for financial assistance to enroll in graduate school, I'll certainly help her out. There is absolutely nothing in today's economy that is working in her favour. My older brother continues to contribute while I intend to keep working part-time to ensure there will be enough support to get her through the lean years to come. My thoughts often turn to her inheritance, since buying her first house and raising her own children in this unforgiving economy will require more financial support than we Boomers needed.

Without family members, albeit retired ones, to stand by our kids, they surely would be lost.

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