Despite global financial market volatility and economic uneasiness, a new survey indicates that most Canadians plan on contributing as much or more to their retirement this tax year as they did one year ago.
The survey, conducted by Leger Marketing on behalf of BMO Financial Group, found that more than two-thirds of Canadians - 69 per cent - said they will boost their Registered Retirement Savings Plans by more or just as much as they did in the 2010 tax year, which averaged $4,700.
However, the poll also found economic fears have some people anxious. For example, 71 per cent of Canadians said they were concerned about how their RRSP would perform this tax year due to economic instability. In addition, more than one-third said they weren't confident in their ability to save for retirement, a stark rise from the 18 per cent who said the same thing during the 2010 tax year.
Optimism levels have also declined appreciably, as 42 per cent were less optimistic about the function of the financial markets compared to 21 per cent in last year's poll.
Caroline Dabu, vice president of retirement and financial planning for BMO, said economic uneasiness has had an impact on Canadians' perceptions about retirement.
"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 Dabu. "The current financial climate has made saving more of a priority for Canadians than ever before."
While the poll found that most Canadians are contributing similar amounts to their RRSP as last year, there were those who said they would put less money towards them. When asked why, 38 per cent of respondents said it was because their money was tied up with other expenses, while 20 per cent said they simply didn't have enough money to match last year's contribution.
Another reason why some Canadians may not be able to contribute as much to their retirement as last year may have something to do with gaps in their financial planning. HSBC, a financial services firm, recent published a report called "The Future of Retirement: Why Retirement Matters." While the report mainly fielded men and women's views of retirement, it also questioned how they were going about planning their families' financial future.
In several aspects, Canadians were falling short, as 35 per cent said they did not have any life insurance, 23 per cent of 50- to 59-year-olds did not have retirement savings and just 50 per cent of people between the ages of 30 and 39 said they had short-term savings.
In order to maximize retirement savings, Dabu recommends investing small amounts of money toward an RRSP on a regular basis. She added that even if these amounts are minimal, they can yield significant gains over time when the effect of compound interest is factored in.
Dabu also said that it's a good idea to talk to a financial advisor for guidance in developing a financial plan or if people have questions about sound investment strategies.