Marie Alcober, BNN.ca staff
10:22 AM, E.T. | February 23, 2015
Personal Finance
Personal Finance
More than half of Canadians will not be contributing to their retirement through a Registered Retirement Savings Plan (RRSP) this year, according to a recent CIBC poll.
As the March 2nd deadline for 2014 contributions nears, CIBC says 54 percent of respondents will not put money aside in a RRSP, 32 percent expect to add to their accounts and 16 percent have already made their entire RRSP contribution for the 2014 tax year.
Of those who are still able to make a contribution before the deadline, only 42 percent of Canadians have enough money to do so.
OTHER KEY FINDINGS
"At this time of year, some families are still focused on paying off their holiday purchases or planning spring getaways, which makes pulling an RRSP contribution together at the last minute even more challenging."
Earlier this month, a study found that Canada’s household debt load is outpacing that of many developed countries. Household debt-to-income ratio rose further, to a record 162.6 percent in the third quarter, according to The McKinsey Global Institute.
John Zechner, chairman and CIO of J. Zechner Associates, says putting money into an RRSP should be a “no brainer” because investors receive an immediate refund and can reap the benefits of being in a lower tax bracket after retirement.
But he also says the retirement savings vehicle may not be the same as it used to be.
“Given that interest rates are so low, most people have investments that are generating capital gains and dividends, which makes the RRSP not as tax-advantaged as it used to be,” Zechner says.
Last month, The Bank of Canada unexpectedly cut its main interest rate by a quarter percentage to 0.75 percent.
As the March 2nd deadline for 2014 contributions nears, CIBC says 54 percent of respondents will not put money aside in a RRSP, 32 percent expect to add to their accounts and 16 percent have already made their entire RRSP contribution for the 2014 tax year.
Of those who are still able to make a contribution before the deadline, only 42 percent of Canadians have enough money to do so.
OTHER KEY FINDINGS
- 16 percent say they still plan to contribute or make an additional contribution towards their 2014 RRSPs
- 14 percent say they are not sure yet whether they will contribute or not
"At this time of year, some families are still focused on paying off their holiday purchases or planning spring getaways, which makes pulling an RRSP contribution together at the last minute even more challenging."
Earlier this month, a study found that Canada’s household debt load is outpacing that of many developed countries. Household debt-to-income ratio rose further, to a record 162.6 percent in the third quarter, according to The McKinsey Global Institute.
John Zechner, chairman and CIO of J. Zechner Associates, says putting money into an RRSP should be a “no brainer” because investors receive an immediate refund and can reap the benefits of being in a lower tax bracket after retirement.
But he also says the retirement savings vehicle may not be the same as it used to be.
“Given that interest rates are so low, most people have investments that are generating capital gains and dividends, which makes the RRSP not as tax-advantaged as it used to be,” Zechner says.
Last month, The Bank of Canada unexpectedly cut its main interest rate by a quarter percentage to 0.75 percent.
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