More than half of Canadians (52%) don’t have a tax-free savings account (TFSA), reports ING DIRECT.
Further, 44% only have a vague idea about how a TFSA works, and 19% say they don’t understand it at all.
But a lack of knowledge isn’t the main reason why Canadians haven’t opened an account—it’s not having any money to contribute (53%). In fact, another 53% report live paycheck to paycheck.
“Since its launch, TFSAs have been a great way to reach short-term and long-term savings goals and provide flexibility that other investment options, like RSPs don’t,” says Peter Aceto, president and CEO, ING DIRECT.
He adds, “With a TFSA, there’s no tax implication when you withdraw funds, and you don’t lose your contribution room over the long term. But many people are still unaware of these rules.”
Additional findings include:
- 31% have no intention of opening a TFSA this year or next;
- of those with a TFSA, 35% have made withdrawals;
- saving for retirement is the primary reason 38% have opened a TFSA;
- 24% of younger Canadians use a TFSA as an emergency fund; 19% are use it to save for a down payment on a house;
- Retirement Savings Plans (RSPs) top the list as preferred investments.