More than two-thirds of Canadians will be contributing the same amount or more to their Registered Retirement Savings Plan this tax year versus last, despite a challenging market environment in 2011, according to a new report.
BMO Financial Group, Toronto, published this finding in a summary of results of a survey conducted in November by Leger Marketing, Montreal. The survey polled 1520 Canadians, 18 years of age or older.
The report indicates that 69% of Canadians will contribute to the same amount or more to their RRSP this tax year. During the 2010 tax year, Canadians contributed an average of $4,700 to their RRSPs.
Analogous to the U.S.'s 401(k) plan, the RRSP is a type of Canadian account for holding savings and investment assets. Introduced in 1957, the RRSP promotes savings for retirement by employees and must comply with restrictions stipulated in the Canadian Income Tax Act. Among them: rules determining maximum contributions, the timing of contributions, assets allowed, and the conversion to an RRIF in retirement.
The report notes that 71% of Canadians are concerned about the performance of their RRSP, given the current state of the economy and volatility of the financial markets. And more than one-third (36%) are not confident in their ability to save for retirement, compared to half that amount during the 2010 tax year (18%)
Additionally, 42% per cent of respondents are less optimistic about the financial markets compared to last year. The report notes this sentiment has doubled since last year's study (21%).
Among the survey's other findings:
More than one-third (37%) of Canadians have made or are planning to contribute to their and/or their spouse's RRSP before the February 29, 2012 deadline.
Of those who are not contributing during the 2011 tax year, or are contributing less than last year, 38% say they have other expenses, while 20% said they do not have enough money to match or exceed last year's contribution.
61% per cent of Canadians have an RRSP; however many younger Canadians (aged 18-34) have not opened an RRSP yet, with 62% stating that they do not have one in place.
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