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Canadians 35-54 years of age are the most likely to have withdrawn money from their RRSP
A new survey reveals that a very significant number of Canadians have withdrawn funds from their RRSPs. The survey, conducted by Leger Marketing BMO Financial Group found four in ten Canadians, mostly middle-aged, have withdrawn funds before reaching retirement.
The survey identified the main reasons why Canadians are withdrawing money early from their RRSPs, including:
- Emergencies, such as the loss of a job (36 per cent)
- Paying off everyday debt, such as credit card balances (26 per cent)
- A house purchase or home renovation (25 per cent)
- Education-either their own or their child’s (10 per cent)
- Vacation/Leisure (6 per cent)
The results indicate that many Canadians are not treating RRSPs for their intended use. Generally, withdrawing money from an RRSP prior to retirement is something to be avoided if possible as early withdrawals can result in a heavy tax bill, the loss of contribution room and the loss of the potential growth of the investment.
There are some situations when withdrawing money from an RRSP makes sense – such as the purchase of a first home. Under the Home Buyers Plan, you can withdraw up to $25,000 (tax free) from an RRSP and put it towards the purchase of a home. However, you will have to repay all withdrawals to your RRSP within a period of no more than 15 years.
Other Key Findings:
- Canadians 35-54 years of age are the most likely to have withdrawn money from their RRSP
- Those in B.C. (48 per cent) are more likely than those in other provinces to have pulled out money for an emergency
- Those in the $100,000 plus income bracket are more likely to say they withdrew money from their RRSPs for their child’s education or their own education (18 per cent)
The online survey was conducted by Leger Marketing from January 31 – February 2, 2011, with 1510 Canadian adults.
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The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE