The majority of Canadians (74 per cent) invest in registered retired savings plans (RRSPs) or plan to, and they appear ready to invest more. The latest research from Investors Group reveals that 79 per cent of Canadians who already have money invested in RRSPs plan to invest the same or more this tax year than they did last year. That's an increase of 11 percentage points from the intentions of last year's contributors (68 per cent).
"Since first introduced 53 years ago, RRSPs have proven to be a tried and true investment vehicle," said Jack Courtney, assistant vice-president of advanced financial planning at Investors Group. "The majority of Canadians are telling us that to know RRSPs, is to love them. This is an important message, especially for those who have not yet considered RRSPs as part of their retirement planning."
As well, the Tax-Free Savings Account (TFSA) continues to gain popularity as a savings and investment tool for Canadians. Forty-three per cent have opened a TFSA compared with 24 per cent at this time last year. Among those who have not yet opened a TFSA, 19 per cent plan to open one in 2011.
When Canadians who did not plan to contribute to RRSPs were asked why, 62 per cent said they didn't have enough money after all their living expenses. While more than half of them reported annual household incomes of less than $40,000, a notable portion (35 per cent) said their household income was between $40,000 and $100,000 a year.
"The survey results indicate that nine out of 10 in the middle income group who say they don't have the money for an RRSP are not working with a financial advisor." Courtney adds. "Research shows that Canadians who rely on professional advice to guide their financial decisions are wealthier, more confident and better prepared for the financial implications of life."
Other reasons Canadians offered for not investing in RRSPs this year included focusing on paying off their mortgage or other loans (17 per cent) preferring to spend their money on things they want now (13 per cent) and a planned contribution to a TFSA (11 per cent). Only nine per cent expressed concerns about investing or stock market conditions.
The survey also found that additional incentives are not likely to change the intentions of many of the non-contributors. Financial contributions by employers, better tax incentives, and guaranteed rates of return on their investments would not prompt an RRSP contribution according to four out of ten (39 per cent) of the non-investors.
People in the 'know'
According to Investors Group research, those who have RRSPs are more than twice as confident that they will have enough money to meet their basic retirement needs than those who do not currently have RRSPs (60 percent compared to 28 per cent).
Similarly, thirty-one per cent of people who have RRSPs feel they are able to achieve their dream retirement lifestyle compared with 14 per cent without RRSPs.
RRSPs aside, the majority of all Canadians (65 per cent) currently working with a financial advisor are more confident that they will have enough money saved to meet their basic retirement living expenses. Thirty-five per cent feel they can achieve their dream retirement lifestyle compared to 19 per cent without an advisor.
"The key to achieving your goal is to have a plan tailored to fit you," said Courtney. "Canadians who focus on their future with a strategy are more likely to get where they want to be."