Canadians are dipping into retirement savings to fund short-term expenses, BMO Financial Group finds in its eighth annual RRSP study.

According to the study, the first part of which was released earlier this month, 40% of Canadians have made a withdrawal from their RRSPs. Those who have done so have withdrawn an average of $20,952—an increase of $3,739 compared to last year’s average of $17,213.

Read: More than one-third of Canadians won’t contribute to RRSPs: poll

The reasons for withdrawing from RRSPs include:

  • purchasing a home (27%),
  • paying for living expenses (23%),
  • funding emergencies (21%) and
  • paying off debt (20%).

Robert Armstrong, vice-president of multi-asset solutions at BMO Global Asset Management, warned in a release about the tax consequences associated with withdrawing from RRSPs. It’s best to make premature RRSP withdrawals only for the purpose of buying a new home or paying for continuing education, as these withdrawals may qualify for the Home Buyers’ Plan or the Lifelong Learning Plan, he said.

Canadians are better savers than investors, the study finds. More than one-third aren’t planning to contribute to their RRSPs this year, but more than half (59%) are putting money into their savings accounts once a month or more and keeping it as cash; 41% are putting money into an investment plan (such as a TFSA or RRSP).

Canadians not putting money into investment plans say they lack funds (44%), are paying off debt (25%) or are spending money on other things (21%).

Also read: Are RRSPs better for business owners?