Canadians not maxing out RRSP contributions

There are more Canadians this year with an RRSP account—67% versus 61% last year, finds a study by BMO. But many are not maxing out their annual contributions.

Read: When a client has capital losses in an RRSP

In fact, just one-third are aware of their annual contribution limit, while 60% rarely or never contribute the maximum amount. Only 13% 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.

Read: Are you clients dipping into their RRSPs?

Additional findings include:

• Of those who do not have an RRSP, 49% intend to open one within the next five years;
• 72% expect to contribute the same amount or more to their RRSP than they did last year;
• 74% have already made or plans to make a contribution towards an RRSP before the 2012 deadline, compared to 69% last year;
• Last year’s average contribution amount was $4,670;
• 68% are concerned about the performance of their retirement savings.

Read: TFSA or RRSP, what’s the right choice?

“During times of market volatility, it’s critical Canadians have a financial plan that includes a retirement component and that they review their investments regularly and seek out the assistance of a financial professional if needed,” says Marlena Pospiech, senior manager, BMO Wealth Planning Group, BMO Financial Group.

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The staff of Advisor.ca have been covering news for financial advisors since 1998.