About 40% of Canadians are shrugging off tax penalties and withdrawing money from their RRSPs early to invest in homes, pay down debt and cover living expenses, a survey from Bank of Nova Scotia suggests.

Nearly half the respondents in the study released Monday said they had made at least one withdrawal and had no plans to pay it back.

Ian Filderman, director of mutual funds at Scotiabank, said he suspects many investors are dipping into their retirement savings without considering the consequences.

“That $5,000 had you left it invested would have grown and compounded on a tax deferred basis to over $27,000 over 25 years,” he said. “We’re talking about a loss of $22,000 in investment gain.”

Respondents who said they withdrew money from their RSPs took out an average of $18,000. When asked what they would do if their retirement savings ran dry, 42% of Canadians said they planned on getting a part-time job.

Filderman said Canadians should take a long view with their savings, keeping in mind they’ll have to make their money last for longer once they retire.

“We’re living longer, that’s absolutely fantastic news but the downside is it’s going to cost us more to live in retirement because we’re living longer,” he said. “That’s why RSPs are so important and it’s important to be contributing to them, not taking out of them early.”

Thirty-seven per cent of respondents said they used money to buy, build or secure a mortgage for a home. Another 24% said they withdrew money to pay back debt and 20% said they used the money to pay for living expenses.