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32% of Canadians in their 40s don’t have an RRSP

[quote] A third (32%) of Canadians in their 40s don’t have an RRSP, according to the TD Retirement Savings Poll released last Wednesday.[/quote]

As startling as this poll was, what blew me away is that only 12% make the maximum contribution every year.

[box type=”info”]The Environics poll of 1,006 aged  25 to 64 (who are still working) found 46% of those in their 40s contribute annually to an RRSP but only 12% make the maximum annual contribution every year.[/box]

If someone at 30 years old invests $200,000 and averages a rate of return of just 5% in 30 years they will have  $864,388.48 at age 60 (close to retirement age).

If I was 45 years old and invested the same amount with the same rate of return, they would only have a return of $415,785.64. I always love to see the difference when you factor in compounding interest.

[quote]As Kevin O’Leary says on Dragon’s Den, “the numbers don’t lie”.[/quote]

It is important to start saving as early as possible because  catchup payments are not going to help.

If you have a defined pension plan, maybe an RRSP is not the best decision for you. You should consider a TFSA account because TFSA withdrawals (during retirement) are considered tax free and they do not affect your benefits which is the reason why I believe that Canadians with defined pension plans should invest in a TFSA before an RRSP.

 

3 thoughts on “32% of Canadians in their 40s don’t have an RRSP”

    1. I know it was incredible reading that stat. I am starting to become a bigger fan of TFSA accounts. RRSP is great but it is just money that you cannot touch.

  1. Yes, it’s important for people to understand the power of investing early, but how many 30 year-olds have 200k lying around?

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