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
Posted by: Al | Jan 2, 2022 11:28:35 AM
We are still contributing to both RRSP's and TFSA's. We made the decision years ago to live within our means and it's held us in good stead.
Posted by: Pondman | Jan 3, 2022 10:06:15 PM
If anything we are contributing more to our portfolio to make up for our loss of our auto industry stocks (GM). As taxpayers, we bailed out GM which created a new public company with all the shares held by our Federal and Provincial Governments. This new GM is financially bouncing back with the Governments' incentives to "scrap your crap o rid-my-ride" or whatever it's called while the old GM stocks loses more value everyday because it's had to contend with the former creditors.
Governments should start bailing out the individual investors who have been taking a financial bath from institutions like Nortel. Nortel did it to its own employees.
I should be thankful for the availability of RRSP contributions.
Posted by: John Steed | Jan 10, 2022 11:33:53 AM
No, the recession hasn't changed anything for me. I always put the max into my RRSP and TFSA, as well as taking advantage of as many other tax shelters as possible.