- Originally from our sister publication, Advisor.ca.
Despite the market challenges of 2011, Canadians say they will keep on contributing to their RRSPs.
A BMO Financial Group survey finds almost 70% of Canadians plan on contributing more or the same amount to their RRSP this year compared to last year. In 2010, Last year, the average of RRSO contribution was $4,700.
“The volatility we have experienced in the financial markets over the past year has increased concern among Canadians about their ability to save for retirement,” says Caroline Dabu, vice-president, retirement and financial planning, BMO Financial Group. In fact, the survey found twice as many Canadians this year (one in three) lack confidence in their ability to save for retirement compared to 2010.
“The current financial climate has made saving more of a priority for Canadians than ever before. It’s encouraging that the vast majority of Canadians who will be contributing to an RRSP will be contributing the same amount or more than last year. However, given the market uncertainty over the last several months, it’s critical that Canadians have a financial plan that includes a retirement saving strategy.”
Reasons cited for the 30% of Canadians reducing or eliminating their RRSP contributions include other expenses and lack of funds.
“It’s understandable that, for many Canadians, it’s a challenge finding the money for their RRSP. However, accumulating a retirement nest-egg doesn’t have to happen all at once,” says Dabu. “Small contributions made on a regular basis over a period of time can lead to significant savings down the road, especially when you take into account the impact of compound interest.”
Last week Statistics Canada released RRSP contribution data for 2010, reporting that Canadians increased their total contributions by 2.6% to $33.9 billion. That’s a far cry for the total available room, however, representing just 5.1% of the unused space.