RRSP contributions expected to drop: Poll

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This article was published 25/02/2025 (206 days ago), so information in it may no longer be current.

Registered Retirement Savings Plan (RRSP) contributions are expected to witness a drop across Manitoba and Saskatchewan in 2025, as residents grapple with financial uncertainty, a new poll by Edward Jones has found.

The survey found 39 per cent of those living in Manitoba and Saskatchewan plan to contribute to their RRSP this year, marking a decline from previous years.

Only 19 per cent intend to contribute the maximum amount, while one in 10 say they cannot afford to invest in their RRSPs at all.

About 52 per cent of those living in Manitoba and Saskatchewan cite financial challenges as the primary barrier to retirement savings.

This is the highest rate among Canadian provinces and 13 percentage points above the national average.

Economic pressures are pushing many to prioritize immediate expenses over long-term retirement planning, Julie Petrera, senior strategist of client needs for Edward Jones, told the Sun.

“Canadians have given us three key reasons why they’re not planning to contribute this year, and those are financial challenges caused by insufficient income, the high cost of living and debt repayment,” she said in an interview on Monday.

“Canadians are having a hard time balancing two things — one is current needs and their future, and the other is paying off debt versus investing.”

She noted while RRSP contributions are down, some residents may be redirecting funds into other registered savings plans such as the Tax-Free Savings Account (TFSA) or the First Home Savings Account (FHSA).

However, the concern remains whether this shift is part of a deliberate financial strategy or a reactionary move to manage immediate financial pressures.

There is also a troubling trend of individuals dipping into their RRSPs to fund day-to-day expenses.

While Edward Jones’ data does not directly capture this trend, Petrera acknowledged that prioritizing short-term needs over long-term savings is a growing issue.

She emphasized the importance of having a financial plan tailored to individual circumstances to balance retirement savings with present-day financial obligations.

The decline in RRSP contributions in Manitoba and Saskatchewan follows a national trend, but there is some good news. Although overall contributions have fallen, 19 per cent of respondents in the region plan to contribute the maximum amount, compared to only 15 per cent nationwide. Nevertheless, 10 per cent of those in the region report being unable to contribute at all.

To address this financial strain, she recommended that individuals work with financial advisers to develop a strategic plan.

“While RRSPs offer tax advantages, they are not the only option for long-term financial security,” she added.

“Alternatives such as TFSAs or employer-sponsored pension plans may be more suitable for certain individuals.”

However, with employer-sponsored pension plans on the decline, more Canadians are responsible for independently funding their retirement.

For those who believe they cannot afford to contribute to an RRSP at the moment, Petrera suggests exploring alternative savings strategies.

The flexibility of TFSAs, for example, may be beneficial for those who need easier access to their funds.

Similarly, the FHSA could be an effective option for those saving for a home. Ultimately, financial planning should be personalized to align with individual goals and circumstances.

The online poll was conducted by Pollara Strategic Insights from Jan. 23-28, with a total of 1,528 Canadians aged 18 years of age or older taking part.

It is deemed accurate within a margin of plus or minus 2.5 per cent, 19 times out of 20, Edward Jones stated, adding the findings have been weighted using the latest Statistics Canada data to ensure they are reflective of the entire Canadian population.

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