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Canadians appear to be mindful of retirement as RRSP deadline looms

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Summary

Monday, March 1 is the deadline for RRSP contributions

Survey finds many Canadians are still thinking or have contributed to their RRSPs, despite the pandemic

RRSP may not be right for everyone, personal finance educator says

TORONTO – If you’re planning to contribute to your Registered Retirement Savings Plan (RRSP), you have until Monday to do so.

A survey for IG Wealth Management shows one third of Canadians have or will be contributing to their RRSP before the March 1 deadline.

It finds that, despite the pandemic, many Canadians still have retirement on their minds.

However, personal finance educator Kelley Keehn says the tax shelter isn’t right for everyone, especially if you have to cash it in later.

“Any money you take out of your RRSP, there’s tax withheld. So if you take $1,000 out, you’re not getting $1,000 in your hand,” she explains. “Number two, you could be selling at a loss. Number three, you lose that RSP contribution forever. And next year, number four, you have to include it as income.”

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According to the survey — for people who have or are planning to contribute — the health crisis has had little impact on people’s ability to save for their retirement thorough their RRSPs compared to the year before.

Only nine per cent of Canadians surveyed say they’re contributing less this year, 13 per cent say they’re putting in more, and 20 per cent are planning to contribute the same amount they did last year.

According to IG Wealth Management, the average amount Canadian adults put in their RRSP for the 2020 tax year is $4,000.