Canada's Housing Bubble

Mar 03, 2010 Julie Fortier Financial Post

Ottawa -- Only 38 per cent of Canadians contributed to their Registered Retirement Savings Plans this season, with the majority saying they didn't have enough money to contribute, according to a Bank of Montreal survey released Wednesday.

The online survey of 1,516 Canadian adults between Feb. 22 and 25 by Leger Marketing found that 56 per cent of respondents did not make a contribution by the March 1 deadline with 64 per cent citing lack of funds as the main reason. Alberta and British Columbia residents were the most cash-strapped with 71 per cent of respondents citing money issues. The figure was 68 per cent in Atlantic Canada and 64 per cent in Manitoba and Saskatchewan. Only 61 per cent in Ontario and 59 per cent of Quebec residents cited cash-flow issues.

"Saving for retirement and working towards achieving long-term financial goals should always be a priority for Canadians," Serge Pepin, director of BMO Investments said in a release. "There will be times when money becomes harder to come by, but your retirement savings should not be the first area to suffer. When money is tight, Canadians simply need to find ways to get creative with their cash flow in order to continue saving for their future. Over the long-term, every dollar counts."

Other reasons for not contributing to RRSPs included already having enough money saved for retirement (16 per cent), forgetting or not thinking it was important to contribute (nine per cent) and lack of confidence in the market or economy (five per cent). Seven per cent of those surveyed preferred not to answer why they didn't contribute.

According to Statistics Canada, annual RRSP contributions declined from six per cent of the available amount in 2007 to just above five per cent in 2008 as the worst of the recession hit the Canadian economy. By early 2009, there was almost $600 billion in aggregate unused RRSP contribution room available.