Tariffs and other concerns may have affected RRSP contributions this season, with clients nervous about saving for the long term.designer491/iStockPhoto / Getty Images
Another RRSP season has almost come and gone. How did it measure up? If nothing else, the conversations were probably interesting, if widespread anxiety and decision paralysis are interesting.
There’s nothing like trying to get clients to focus on retirement savings when potentially crippling tariffs are threatened to take effect any day, next month, or the month after that.
As Kira Vermond reported this week, advisors are finding it harder to encourage long-term planning. Clients are thinking twice about big financial decisions such as when to retire, buy or sell a house, expand a business or go back to school when the economic environment feels so tenuous.
What impact did that have on RRSP contributions? The preliminary reviews are mixed.
A Bank of Montreal survey conducted by Pollara Strategic Insights released this month found that average RRSP contributions were on track to reach a new record. Of course, the survey was conducted in mid-November, when economic forecasts were more upbeat about a second term for U.S. President Donald Trump. And almost two-thirds of survey participants also said rising prices were hurting their ability to save.
An Edward Jones survey conducted in late January, also by Pollara, found the percentage of Canadians planning to contribute to RRSPs was down to 39 per cent this year. As Meera Raman reported, the drop is sharpest among women and younger Canadians.
StatsCan data show the percentage of people who contribute to RRSPs is far lower than those who say they’ll do so in surveys. The most recent data, for the 2022 taxation year, show that 21.7 per cent of tax filers contributed to their RRSPs.
Interestingly, while that figure has been declining for more than a decade (with the exception of 2020 and 2021, when household savings spiked during the pandemic), the median contribution has been increasing since 2010 and reached $3,910 in 2022.
Of course, for some, RRSP season is no longer the rush it used to be as more advisors encourage monthly contributions over a pre-deadline lump sum. That may take some of the pressure off, Helen Burnett-Nichols wrote earlier this year, allowing advisors to focus on the bigger retirement picture.
For anyone who found RRSP season boring this year, at least tax season is right around the corner.
Must reads
Money on the table: Most clients are well aware of the income tax refund from RRSP contributions, but many don’t realize those contributions may also open up access to certain income-tested benefits. Aravind Sithamparapillai breaks it down.
RRSP vs. everybody: With other registered accounts in the mix, where should Canadians prioritize their savings this RRSP season? Barbara Balfour reports on these rules of thumb to decide between contributions to RRSPs, FHSAs and TFSAs.
Tax Court says: A financial advisor is liable for taxes on a $245,000 benefit he received when he settled an outstanding debt with his former firm for less than the total he had borrowed under an interest-free loan retention program, the Tax Court of Canada has found. Rudy Mezzetta reports.
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Costly threats: After another confusing week with regard to tariffs, Tim Shufelt writes that the mere threat of a trade war with the U.S. is enough to poison the investment climate in Canada.
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