Between not saving for RRSPs and making early withdrawals, Canadians are in a financial bind.
Only 46% of Canadians plan to contribute to RRSPs this year, reveals part one of a BMO survey, but that figure paints only half of the grim picture.
Part two of the survey reveals that 38% of Canadians have withdrawn RRSP funds this year, before age 71 — an increase of 4% from last year.
It gets worse.
Although purchasing a home remains the top reason Canadians make early withdrawals (30%), other reasons are to pay for living expenses (21%), to pay off debt (18%) or to pay for emergencies (18%).
On average, Canadians have withdrawn $17,213 from their RRSPs this year, an increase of $1,305 from last year.
Although 75% are very concerned about the consequences and 73% say they’re familiar with the tax penalties or the rules for repayment under the homebuyers plan, 19% don’t expect to pay the funds back.
The failure to pay back funds is potentially also expressed in the results from a Mackenzie Investments poll. That poll finds a similar percentage of Canadians — 21% — have negative feelings (anxious/worried or confused) 30 days out from the RRSP deadline, which would certainly be expected for those without funds to contribute.
And advisors continue to make a difference, as confirmed in an earlier Mackenzie poll and reaffirmed now, 30 days from the deadline. While only 36% of Canadians say they’re confident heading into RRSP season, that figure jumps to more than 50% for those with advisors.
Here’s the national breakdown of Canadians who withdrew funds early:
|Region||Percentage of Canadians who have made an RRSP withdrawal before age 71||Average amount Canadians have withdrawn from RRSPs||Top reason for making an RRSP withdrawal|
|National||38%||$17,213||To buy a home (30%)|
|Atlantic||48%||$25,485||To make a large purchase, other than a home (22%)|
|Quebec||39%||$17,231||To buy a home (23%)|
|Ontario||35%||$16,593||To buy a home (31%)|
|Prairies||33%||$10,546||To pay off debt (27%)|
|Alberta||41%||$12,524||To buy a home (38%)|
|B.C.||44%||$21,538||To buy a home (38%)|
The BMO survey was conducted online by Pollara in December 2016, with a sample of 1,500 Canadians. The margin of error is ± 2.5%, 19 times out of 20.