RRSP Startline not Deadline

This past weekend was the official launch of the often called “RRSP Season” which will come to a close on Monday March 2nd. The latest numbers from the polls showed that far fewer Canadians have been making use of this tax-advantaged investment program and this should worry all of us.

Canadians are falling farther and farther behind in their retirement savings and company pension plans are rapidly disappearing. The onus falls more heavily on Canadians now more than ever before to save for their own retirements.

Depending on which study or poll you look at, the past couple of years have seen somewhere between 22-30 per cent of all Canadians contributing to their RRSP accounts in a given year.

I’m not saying that RRSPs are the only answer here; some may be better off investing in TFSAs or non-registered type accounts. But either way, we need to start saving more! Part of the problem lies with this notion of the “RRSP deadline” and that you should dump money in once per year in late February.

Most people find it far too challenging to come up with a year’s worth of contributions in a few weeks time and end up not contributing what they should as it’s simply not available.

For the 70 plus per cent of you out there that did not put money away yet this year, consider this year’s RRSP deadline as a starting line instead. March is the month for you to sit down with your Certified Financial Planner Professional and set up an automatic weekly or monthly contribution plan.

Your financial planner can help you determine what the correct monthly amount is and what type of investment (TFSA vs RRSP) it should go into, but the point is, you need to start! A regular contribution plan is far easier to manage and it will integrate more smoothly with most people’s budgeting and finances.

While you may be reading this and thinking that you just don’t have any extra money at the end of the month, the opposite is likely true. Consider starting with a small amount, even $25 per month if need be. After awhile you won’t notice that extra money being automatically deducted each month and you can slowly bump up the contribution amount over time.

And remember when tax filing time comes around, take that refund amount that you get from the RRSP contributions and put that into your account as well so that you can take full benefit of the tax advantaged growth of the program.

Whether you made an RRSP contribution or not this year, consider March 2nd your starting line for your 2020 retirement savings plans and not just a deadline that is now in your rear-view mirror.