Less than one-third of Canadians are putting money away regularly, leaving them short of funds as the RRSP deadline approaches
TORONTO, Feb. 13, 2014 /CNW/ - While 56 per cent of Canadians say they plan to make a contribution to their Registered Retirement Savings Plan or Tax-Free Savings Account in 2014, nearly two-thirds of them have not set aside the money according to a new poll from CIBC (TSX: CM) (NYSE: CM) conducted by Harris/Decima. This lack of savings has many scrambling to crunch 12 months worth of retirement savings into just a few weeks before the RRSP deadline.
Key findings of the poll include:
- 56 per cent of Canadians say they will contribute to an RRSP, TFSA, or both in 2014;
- However, 64 per cent of those planning to contribute say they do not have enough money set aside for their planned contribution;
- The gap comes from a lack of regular savings as only 31 per cent have a regular investment plan for retirement, where money is put away automatically throughout the year.
"While it is encouraging that so many Canadians are planning to invest in their retirement this year, most do not yet have the money set aside to make the contribution they want to," says Christina Kramer, Executive Vice President, Retail and Business Banking, CIBC. "With the 2013 RRSP contribution deadline approaching, it can be a scramble to find the money to make a contribution at a time when some families are still paying off holiday bills or trying to manage other expenses."
The poll results underscore the importance of contributing regularly throughout the year, whether it's for an RRSP, TSFA or both. Making your contributions early helps to ensure that you meet your annual investment goal, and lets you take advantage of one full year of tax free or tax deferred growth on the funds you invest.
Good intentions, but not enough action
Six in 10 Canadians (58 per cent) say that saving regularly will make it possible for them to retire in their 60s, but less than a third of them (31 per cent) follow through with a regular investment plan, pointing to a gap between intention and action.
"This gap highlights the need to build a realistic financial plan," says Ms. Kramer. "While the intentions of Canadians are in the right place, history tells us that without a regular investment plan, many will not be able to follow through and make the contribution that will help them achieve their long term goals."
Recent data from Statistics Canada (2011) shows that only 24 per cent of eligible tax filers contributed to an RRSP.
50-somethings no better off despite having fewer years to retirement
Canadians between the ages of 45-54 - a demographic that is typically more focused on building up their retirement savings - were no better off than those much younger when it came to regular savings. Just 34 per cent of them said they had set up a regular investment plan - the same percentage as those 20 years younger, aged 25-34.
"Whatever your age, it's never too late to start saving for retirement,'' says Ms. Kramer. "It is important to make sure you don't overlook retirement contributions to focus only on short-term financial priorities, such as paying off debt or saving for a home. The right financial plan can help you balance all of these goals."
Advice on Maximizing Retirement Savings
- Talk to an Advisor - Meet with an advisor to understand your options, and work with them to develop a plan that can help you in managing multiple financial priorities and staying on track over the long term.
- Contribute regularly - Set up a regular investment plan to automatically withdraw smaller amounts throughout the year, rather than trying to find the funds for a large lump payment at the deadline.
- Track and manage day-to-day spending - Take a hard look at your budget; saving for retirement may mean delaying some consumption from the present to the future.
KEY POLL FINDINGS
Percentage of Canadians who intend to contribute to either an RRSP, TFSA, or both in 2014, by region:
|Manitoba and Saskatchewan||55%|
Percentage of Canadians who intend to contribute to either an RRSP, TFSA, or both in 2014, by age:
Percentage of Canadians who have a regular investment plan to automatically save for retirement, by region:
|Manitoba and Saskatchewan||30%|
Percentage of Canadians who have a regular investment plan to automatically save for retirement, by age:
Each week, Harris/Decima interviews approximately 1,000 Canadians through teleVox, the company's national telephone omnibus survey. These results were gathered from a sample of 1,734 RRSP-eligible Canadians between December 5 and 16, 2013. A sample of this size has a margin of error of +/-2.35%, 19 times out of 20.
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at www.cibc.com.