Edward Jones study shows majority of Canadians not planning to contribute to their accounts
A growing percentage of Canadians are unable to contribute to their RRSPs due to financial constraints.
A new report issued by Edward Jones Canada reveals how Canadian investors are approaching this year's RRSP season as they face growing prices and the ongoing COVID-19 epidemic.
According to the study, 33% of Canadians want to contribute to an RRSP this year, similar to last year. The percentage of Canadians who want to give the maximum amount stayed constant at 10%.
The capacity of Canadians to pay their contributions may be harmed by rising inflation and the resulting increases in living and lifestyle expenditures. Just over half (55%) of those who didn't contribute to an RRSP this year – which was up 11% from the previous year – claimed they couldn't afford it.
Nearly a third of Canadians (29%) cannot afford to invest their money at all, while a quarter (25%) regard debt repayment as a top financial priority. The remaining 45% of the people who are not contributing to their RRSP this year are focusing on other types of accounts or investment options.
Canadians value TFSA contributions (49%), non-registered investment accounts (17%), and real estate purchases (17%) above RRSP contributions (8%). The 18–34-year-old age group is the most likely to contribute to an RRSP (42%), and they are also the most likely to contribute the maximum amount (16%).
The total proportion of people in this age group who contributed grew by 7% year over year. This age group, on the other hand, was 13% more likely to believe that COVID-19 has harmed their capacity to save for retirement (57%), and 8% more likely to have modified their financial priorities because of the epidemic (39%).
Overall, 44% of Canadians believe the epidemic has harmed their capacity to save for retirement, while 31% have shifted their financial priorities as a result of the pandemic. Despite this, almost half of Canadians (49%) said they manage their finances without the help of a financial counselor.
David Gunn, President of Edward Jones Canada, said: "We are experiencing high inflation, economic volatility, and uncertainty around the pandemic, all of which impact the unique financial situation of Canadians. Understanding the value of a comprehensive, long-term financial strategy that considers evolving financial priorities, as well as the environment around us, is the key [for clients to stay] on course towards [their] personal and financial goals."
Among respondents working with a financial advisor, nearly three quarters (73%) prefer personal relationships, whereas a professional one is preferred by the rest (27%). A personal connection is characterized as one that appreciates a client's life and circumstances as much as their investments, whereas a professional relationship prioritizes outcomes and returns more than life and circumstances.
