Fewer people intend use their Registered Retirement Savings Plans (RRSPs) this year, but those who are contributing say they plan to put in a little more.
BMO Financial Group's sixth annual RRSP study reveals that 61% of Canadians expect to make a contribution before the deadline this year, which represents a decline of 3% compared to last year. However, for people who have already contributed, the average amount they invested was $3,984 (up from $3,738 last year). For those who have not yet set aside funds but are still planning to contribute, the average amount is $3,327 (up from $2,892 in 2015).
RRSPs have been available for more than half a century, but BMO points out that many people still do not have a firm grasp of how the system works; only 41% of the survey respondents claim they are "very knowledgeable" about the subject, and less than half knew how to contribute (38%), when contributions must be made (38%), the amount one can contribute (31%), or the kinds of investments that can be held within an RRSP (20%).
"Contributing to an RRSP is one of the most effective ways to save for retirement, but it’s clear there’s a degree of uncertainty among many Canadians about several important elements of the program,” comments Robert Armstrong, vice president of BMO Global Asset Management.