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January 01, 2022

Has the downturn changed the way you contribute to your RRSP?

A crappy economy has a funny way of re-shuffling our priorities.

In good times, we work X number of hours a week, pay Y  amount of our credit card bills and invest Z dollars out of our paycheques.

But that last effort – being fiscally responsible and investing in our future – is often the first thing to go when our present-day matters are threatened.

Such certainly seems to be the case highlighted in a December RBC poll, one showing that 65% of Canadians won’t/didn’t contribute to their RRSP last year.

The paltry 35% participation rate is the lowest in Canada since 1996.

RBC’s survey is chalked full of statistical goodies that don’t exactly bode well for our nation’s economic future. They include:

-32% of Canadians haven’t yet started saving for retirement (compared to 24% in 2008’s poll)
-just 36% said they’re planning or have planned for retirement (down from 42% in 2008)
-only 53% of 55-plus Canucks are doing retirement planning (down from 67% last year)

Sobering figures. What’s worse for the fate of RRSPs is the rate in which young people are investing in them; less than half (45%) of Canadians 18-34 have considered making contributions. Writes Jonathan Chevreau of the Financial Post:

“It’s true that younger people still have plenty of time to get their retirement act together and that in this economy, jobs or job training are no doubt priorities. Then too, for younger people in lower tax brackets, it’s arguable that the new Tax Free Savings Account (TFSAs) make more sense than RRSPs.

“There is a case for low-tax-bracket Canadians to delay RRSP contributions until they’re in a higher tax bracket. At that point, they’d get a bigger tax deduction by minimizing their taxable earned income.”

Do you agree with Chevreau’s pro-TFSA argument, and has the recession changed the way you contribute to your own RRSP?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...