A recent survey from Leger Marketing, commissioned by the Bank of Montreal found that investors, while still planning on investing this RRSP season, are not overly confident in doing so.
While Canadians are still faithful in the value of holding an RRSP, and intend to take advantage of the tax savings, many are losing confidence in the markets, and will contribute with unease.
69% of respondents still plan to contribute to their RRSP’s. But the outlook for those investors has changed dramatically from last year, given the extreme volatility seen on the markets, as well as they growing economic unease, domestically and globally.
71% of Canadians are concerned about the performance of their RRSP in the context of current market volatility. 36% are not confident in their ability to save for retirement, which has doubled since last year; 42% of respondents are less optimistic about the financial markets this year compared to last year; this sentiment has doubled since last year as well. The survey also found that slightly more than a third of respondents either already have, or plan on making a contribution to their spousal RRSP plans.
"The volatility we have experienced in the financial markets over the past year has increased concern among Canadians about their ability to save for retirement," said Caroline Dabu, Vice President, Retirement and Financial Planning, BMO Financial Group. "The current financial climate has made saving more of a priority for Canadians than ever before. It's encouraging that the vast majority of Canadians who will be contributing to an RRSP will be contributing the same amount or more than last year. However, given the market uncertainty over the last several months, it's critical that Canadians have a financial plan that includes a retirement saving strategy."
Of those contributing, many are contributing less, citing rising expenses, and difficulties with cash flow.
“It's understandable that, for many Canadians, it's a challenge finding the money for their RRSP. However, accumulating a retirement nest-egg doesn't have to happen all at once," said Ms. Dabu. "Small contributions made on a regular basis over a period of time can lead to significant savings down the road, especially when you take into account the impact of compound interest."