Maria (45) works full-time, earning $90,000 annually. Her husband, David (48), is a self-employed graphic designer, with fluctuating income around $70,000. They have two children, aged 10 and 12, for whom they contribute $2,500 annually to each RESP. They also want to save for a down payment on a larger home in 5 years and maximize their retirement savings. Considering their current financial situation and multiple goals, which strategy offers the best integrated approach?

Question: Maria (45) works full-time, earning $90,000 annually. Her husband, David (48), is a self-employed graphic designer, with fluctuating income around $70,000. They have two children, aged 10 and 12, for whom they contribute $2,500 annually to each RESP. They also want to save for a down payment on a larger home in 5 years and maximize their retirement savings. Considering their current financial situation and multiple goals, which strategy offers the best integrated approach?

Answer options:

• Prioritize maximizing RESP contributions to leverage government grants before focusing on the down payment and retirement.
• Focus on saving for the down payment in a non-registered account, then retirement, and finally increase RESP contributions. ✅ Contribute to TFSAs for both the down payment and retirement savings due to tax-free growth, then top up RESPs.
• Allocate any surplus funds primarily to David's RRSP due to his higher marginal tax rate as a self-employed individual.

Correct answer: Contribute to TFSAs for both the down payment and retirement savings due to tax-free growth, then top up RESPs.

Explanation: Utilizing TFSAs allows for tax-free growth and withdrawals, which is beneficial for both short-term (down payment) and long-term (retirement) goals. The flexibility of TFSAs makes them suitable for combined goals where the timelines might overlap and access to funds is critical without tax penalty, while also ensuring RESP grants are captured.