An increasing number of Canadians are investing in RRSPs, but most are not maxing out their annual contribution, according to a new study released by Bank of Montreal.
The study found that 66% of Canadians surveyed have an RRSP, up six per cent from 2011. Of those who do not have an RRSP, 49% say they intend to open one within the next five years.
Seventy-two per cent of survey respondents expect to contribute the same amount or more to their RRSP than they did last year. Last year’s average contribution amount was $4,670.
The majority of those surveyed with an RRSP (74%) have already made or plan to make a contribution towards an RRSP before the 2012 deadline; Last year at the same time, 69% of Canadians planned to make or had made a contribution.
However, the study also found that many Canadians are worried about the health of their RRSPs given the volatility that has characterized financial markets over the last two years; 68% report that they are concerned about the performance of their retirement savings.
Unused contribution room will exceed $1 trillion by 2018
The study also examined Canadians’ awareness around RRSP contribution limits; the results showed that only one-third are aware of their annual contribution limit while more than 60% either rarely or never contribute the maximum amount to which they are entitled. Only 13% report that they hit the maximum each and every year.
As of 2011, the total unused RRSP contribution amount stood at about $500 billion; the figure is estimated to exceed $1 trillion by 2018.