Retirement savings remain a priority despite financial challenges
As the February 29 deadline for contributions to Registered Retirement Savings Plan contributions approaches, are Canadians feeling confident in contributing during 2024?
A new survey from Edward Jones Canada reveals that amid continued pressures from the cost of living and economic uncertainty, two thirds of respondents are cautiously optimistic at best about their financial situation as 2024 progresses, while one fifth are struggling to keep on top of their financial commitments.
Paying bills is an immediate concern but half of those taking part in the poll want to stay on track for the future by contributing to their RRSPs, although just 21% plan to make the maximum contributions this year (the lesser of 18% of their 2023 earned income or $30,780).
Even among the youngest cohort surveyed (18-34 years old) six in ten plan to contribute to their RRSPs this year, around the same share as for the 34-54 age group.
“It’s clear that amid the current economic climate, Canadians prefer to stick to what they know by contributing to their RRSP this year,” said Julie Petrera, Senior Strategist, Client Needs at Edward Jones. “RRSPs are a valuable retirement savings tool, in fact they can be used for saving for more than just retirement. I find it promising that a high portion of young Canadians are making choices to save for long-term goals and trust they fully understand the benefits of RRSPs, which can be used for a first home purchase, returning to school, and retirement. An Advisor can help determine the best way to use these accounts for each individual’s unique situation.”
But 12% of all respondents said they cannot afford to make any contributions and 10% plan to invest elsewhere such as TFSAs, First Home Savings Accounts, real estate, etc.
"Retirement planning is not a one-size-fits-all approach. It’s important to learn about the options available and the various benefits and restrictions they offer, both immediate and longer-term. With so many factors to consider for every account type and individual situation, partnering with a trusted advisor can help Canadians think differently about money and how they plan for retirement,” added Petrera. “And as one’s needs and goals are constantly changing, it’s crucial not to put a plan on autopilot and instead evolve investing strategies to address those changes.”
Recently, Doug Darmer, CEO of Retirement Navigator, shared with Wealth Professional the most common mistakes advisors & investors make in RRSP season.
