Better late than never: 60% of Canadians still need to make their last-minute RRSP contribution
- TD dispels common RRSP misconceptions and encourages Canadians to contribute all year-round
- TD infographic on last-minute RRSP contributions available at: http://www.paradigmpr.ca/TD/TD-Last-Minute-Infographic.pdf
TORONTO, Feb. 19, 2013 /CNW/ - Despite having an entire year to contribute to their RRSPs, if past behaviour is any indication, the majority of Canadians (60%) who will contribute to their RRSP this year will do so in the next two weeks. Many will leave it right down to the wire for the March 1 deadline according to the TD RRSP Deadline Poll.
"Our research shows that 59% of Canadians contribute annually to an RRSP. Those contributions offer tax benefits and are one of the most important steps you can take to secure your financial future," says Kim Parlee, Vice President, TD Wealth Management. "Making regular contributions throughout the year, every year, is the most effective way to grow your retirement nest egg."
Below, Parlee addresses three reasons Canadians say they wait until the last minute to contribute and offers advice on how to overcome these common misconceptions to make the most of their RRSP contributions in 2013.
Misconception #1: "I don't have enough money throughout the year to contribute."
Of Canadians who wait until the last minute, 44% said they didn't feel they had enough money to contribute to their RRSP throughout the year. Twelve percent said they meant to set up regular automatic transfers to their RRSP, but didn't get around to it.
"Creating an automatic monthly RRSP contribution is easy - and then you're set for the rest of the year. Your money is moved to your retirement savings before you have a chance to spend it on other things," says Parlee. "Contributing smaller amounts throughout the year won't have a significant impact on your lifestyle and you'll avoid a last-minute scramble to come up with a lump-sum at the end of the year."
According to Statistics Canada, the median amount Canadians contributed to an RRSP in 2011 was $2,830. "If you break that down, it's only slightly more than $50 a week," says Parlee. "That's not a lot week-to-week, but it does add up over the long-term."
Misconception #2: "It's a better strategy to wait until the last minute to contribute."
Twelve percent of Canadians who waited until the last minute said they think it's the best strategy for investing in an RRSP and 45% who invest in an RRSP say they only contribute in lump-sum payments.
"If you wait until just before the deadline and make one lump-sum payment, you're missing out on the potential for compound interest throughout the year," says Parlee. "While this amount may not seem significant, it adds up over time."
Misconception #3: "I shouldn't invest because of market volatility."
Thirteen percent of Canadians who waited until the last minute said they didn't want to invest this year because of market volatility.
"If you're worried about the impact of ups and downs in the markets on your retirement savings, an advisor can offer advice to help you protect your investment portfolio over the long-term so that you have peace of mind," adds Parlee. "He or she will look at the asset allocation that's right for your risk tolerance and the number of years until you plan to retire."
Have you ever considered that your organizational habits could be an indicator of how you save money for the future? Take TD's Last-Minute Quiz to find out your retirement savings style.
About the TD RRSP Deadline Poll
TD Bank Group commissioned Environics Research Group to conduct an online custom survey of 2,407 Canadians 25 years of age or older. The total sample was weighted by age, gender and region to be proportionately representative of the Canadian population 25 years of age and older. Responses were collected between December 5 and 11, 2012.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group (TD). TD is the sixth largest bank in North America by branches and serves approximately 22 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Auto Finance Canada; Wealth and Insurance, including TD Waterhouse, an investment in TD Ameritrade, and TD Insurance; U.S. Personal and Commercial Banking, including TD Bank, America's Most Convenient Bank, and TD Auto Finance U.S.; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 8.5 million online customers. TD had CDN$811 billion in assets on October 31, 2012.The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.
SOURCE TD Bank Group