RRSP: Too Little, Too Late?

Some Canadians left sprinting to RRSP finish line

RRSP, retirement, savings

(TORONTO, ON) – When it comes to RRSPs, are you a tortoise or a hare?  Were you the slow-and-steady tortoise, carefully plunking away retirement savings during 2014?  Or were you the hare – now having to sprint because you were caught napping?

According to a recent poll from CIBC, many Canadians are just plumb skipping the race.  With Canadians in the RRSP homestretch, the bank found that:

  • 54% are not making an RRSP contribution for the 2014 tax year
  • 16% are tortoises – they have already made their entire RRSP contribution for 2014
  • 16% are hares – they’re in the race, but haven’t reached the finish line; they say they still plan to contribute or make additional contributions for the 2014 tax year

Of those hares, in a last-minute mad dash to the finish, only 42 per cent have the funds for their contributions set aside.

This is discouraging, but not surprising, to many financial experts.  Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, recognizes the many pressures that are weighing on the average Canadian budget.

The stats are scary,” says Schwartz.  “The average Canadian owes nearly $21,000 in non-mortgage debt, and half of us are living paycheque-to-paycheque… it’s no wonder people are having a hard time making last-minute contributions.”

Christina Kramer, the executive vice president of Retail and Business Banking for CIBC, agrees.

It’s very challenging to save up a year’s worth of your RRSP contribution in the few weeks before the deadline,” says Kramer.  “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.

RRSPs can be a confusing topic, with or without the financial deck stacked against you.  The team at Consolidated Credit has set the table with a little food for thought so that Canadians won’t keep finding themselves hating the end of February, year after year:

Eliminate expensive debt.  If you’re one of the 46 per cent of credit card users carrying a balance, focus on paying it down.  Instead of continually making minimum payments and stretching out the lifespan of the debt, focus in on it and eliminate it as quickly as possible.  Instead of padding your creditor’s pockets with interest payments, clear your debts and send that money toward your RRSP contributions.

Automate and relax.  Setting up a regular investment plan will allow you to automatically contribute smaller, more manageable amounts towards an RRSP.  Not only is this a lot easier than coming up with a lump sum in February, it also allows your money to experience growth over the entire year.

Find extra cash.  Evaluate your budget and be ruthless if you need to.  Since now is the time when many Canadians are looking at their 2014 taxes, it is also a good opportunity to look at spending.  Go into your banking and credit card records and find out how much money went where.  You may shock yourself with how much you spent on unnecessary items; tracking your spending and seeing it in black-and-white may be the only way to come to that realization.

Reinvest your tax refund.  One of the biggest RRSP incentives is the enlarged tax refund that you may receive.  Why not get one step ahead of the game and invest this year’s refund in your RRSPs.  That contribution will be reflected in next year’s claim, and you can use the next refund to continue the cycle.

Seek help.  If you are struggling to free up extra money, or you feel like you’re drowning in debt, you might need a helping hand.  Contact a non-profit credit counselling organization or speak to a financial advisor for professional help so that you can start making moves to make things right.


About Consolidated Credit Counseling Services of Canada, Inc.: 

Consolidated Credit Counseling Services of Canada is a national non-profit credit counselling organization that teaches consumers about personal finance.

For more information or to request an interview with Jeffrey Schwartz, please contact:

Jacob MacDonald, Public Relations Coordinator, Consolidated Credit Counseling Services of Canada, Inc.

T: 416-915-7283 ext.1041, C: 647-390-5253, F: 416-915-5200, E: [email protected]

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