More Canadians Withdrawing From Their RRSPs: Poll
Canadians are continuing to dip into their retirement savings to fund short-term expenses, a new poll finds.
Roughly 40 per cent of Canadians have made a withdrawal from their RRSP, according to BMO Financial Group data released on Feb. 15.
And those who have done so have withdrawn an average of $20,952, an increase of $3,739 compared to an average of $17,213, last year.
Reasons for withdrawing from their RRSPs include: to purchase a home (27 per cent); to help pay for living expenses (23 per cent); for emergencies (21 per cent); and to pay off debt (20 per cent).
“We’ve seen a steady increase in the amount of money Canadians are withdrawing from their RRSPs to meet short-term needs; this should be considered only as a last resort,” said VP of multi asset solutions at BMO global asset management Robert Armstrong.
“There are tax consequences associated with withdrawing from your RRSP, so be sure to consult a financial professional to ensure you have exhausted all other options that may be available to you.”
It’s best to only make premature RRSP withdrawals for the purpose of buying a new home or paying for continuing education, said Armstrong, since these withdrawals may qualify for the Home Buyers Plan or the Life Long Learning Plan.
Canadians are better savers than investors, according to the BMO poll.
It finds more than one-third aren’t planning to contribute to their RRSPs this year but once a month or more, more than half of Canadians (59 per cent) are putting money into their savings accounts and keeping it as cash, while 41 per cent of Canadians are putting money into an investment plan, such as a TFSA or RRSP.
Reasons why Canadians are not putting money into an investment plan include: not having enough money (44 per cent); paying off debt (25 per cent); other things to spend money on (21 per cent).
“Although a majority of Canadians are saving, most are not taking advantage of the additional returns that investments can provide,” said Armstrong.
“Consider investing a small amount each month through a Continuous Savings Plan, which makes automatic and consistent contributions to your investments throughout the year.”
Do you withdraw your money from RRSPs?