Canadian investors are taking a more conservative approach to their RSP investment decisions this year, according to a recent poll commissioned by TD Bank Financial Group. But despite making smaller contributions and taking lower risks, the majority of investors still believe they will be able to retire before or at age 65.

The survey found a large drop in the size of “nest-egg” RSP investors think they will need for a comfortable retirement, down to $547,000 from $652,000 the year before.

Respondents planning on making an RSP contribution said they intended to contribute on average $3,900 to their RSPs this year — 20% lower than last year’s average of $4,850.

The third annual TD Wealth Management RSP Investor Poll found that Canadians expect an average 8.9% return on their RSP investment in 2003 — exactly the same as they expected for 2002. As well, nine out of 10 RSP holders under 65 do not plan to work past retirement age. Among them, nearly two-thirds say they will be either fully or partially retired before 65, and one-third say they will work up to retirement age. Finally, almost no one said they planned to work after age 65.

The survey asked two questions to determine shifts in asset mix. The first was what types of investments will people include with this year’s contribution. One-quarter (26%) indicated equity-based mutual funds, down from almost half (48%) last year. Sixteen percent said they would purchase individual stocks, down from 31% the year before
Thirty-one percent indicated they will buy GICs or long-term deposits, slightly down from 34% last year. Eighteen percent will buy bonds, versus 25% last year. Sixteen will include pure savings accounts, versus 38% last year.

The second question was which types of investments would take the largest share of their 2002 contribution. Twenty-one percent said GICs or long-term deposits would occupy the largest share, up from 15% last year. Eighteen percent said equity-based mutual funds, down from 28% last year. Seven percent indicated money market funds, down from 13% last year. Three percent indicated bond funds, down from 10% last year

While slightly more than half of Canadians (53%) are counting on personal savings and RSPs to fund their retirement, one-third (33%) will rely primarily on their CPP/QPP Old Age Security pension and one-quarter (26%) on a company pension plan. Surprisingly, two-thirds of company pension plan holders (67%) did not know what types of investments made up their pension plan.