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February 03, 2022

RRSP contributions continue to plunge: Report

Having trouble coming up with an RRSP contribution this year? Well, you’re not alone. 

Citing economic conditions as the main reason, a recent Royal Bank survey suggests that just 35 per cent of Canadians have contributed to or plan to contribute to an RRSP this year – the lowest percentage of contributors since 1996.

And this isn’t likely to change anytime soon, according to a recent RBC Economics study which predicts that the amount of money going into RRSPs is likely to decline sharply over the next 10 years.  

The decline in RRSP contributions can largely be pinned on changing demographics, according to RBC’s research. However, it’s important to note that steady increases in contribution limits and scrapping the cap on carry-forward room also spurred savings in the past.

Historically, the savings patterns of Canadian age groups suggest that those aged 34 and under are the least likely to make RRSP contributions, RBC reports. Contributions rise between the ages of 35 and 55, at which point they decline. 

Despite the fact that most many people have tens of thousands of dollars in unused RRSP room, “the projections suggest that the declining trend in the ratio of total RRSP contributions to disposable income that began in 1998 will continue through 2020,” the report says.  

And, to add to the confusion, even if you do have the money to work with you may get more bang for your buck by ploughing future savings into a tax-free savings account rather than an RRSP, says the C.D. Howe Institute.  

Do you plan on contributing to your RRSP this year? If not, why? 

By Gordon Powers, 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...

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...