Edward Jones Study: Sharp increase in RRSP contributions expected in 2023 despite half of Canadians nervous about their finances

While the majority of Canadians cite the cost of living as a barrier to saving for retirement, 51 per cent still plan to contribute to their RRSP this year

MISSISSAUGA, ON, Feb. 13, 2023 /CNW/ - Edward Jones Canada has released a new study which uncovers how Canadian investors plan to approach this year's RRSP season. The research found that a majority (51 per cent) of Canadians plan to contribute to their RRSP this year, which represents a substantial increase of 18 percentage points over last year (33 per cent in 2022). Of those contributing, 23 per cent plan to use the maximum amount.

The year-over-year surge is driven by those aged 18-34 and 35-54, who are 22 per cent and 23 per cent more likely to contribute to their RRSP this year, respectively. Respondents in these age cohorts are 17 per cent and 15 per cent more likely to contribute the maximum amount compared to last year, respectively.

While 51 per cent of respondents noted the cost of living is their most significant barrier to saving for their retirement, it has not impacted their ability to contribute to their RRSP, as the percentage of those unable to afford to contribute has plummeted from 29 per cent to 16 per cent year-over-year. Income (19 per cent) and debts (14 per cent) were also cited as significant barriers to saving.

Despite this, Canadians' relationship with money remains tense as they brace for what is expected to be another year of economic volatility. When asked to describe how they feel about their current financial situation, half (50 per cent) say they are nervous, and an additional 14 per cent say they are fearful. 33 per cent of respondents say they are happy with the current state of their finances.

"Intentions to contribute are at their highest level since the start of the pandemic, which is due in part to the Bank of Canada's decision to increase interest rates. Those rate hikes were designed to replace spending with saving, and our data demonstrates they are doing just that," said Julie Petrera, Senior Strategies, Client Needs at Edward Jones. "As priorities shift towards saving, in this case for their retirement, it's important for Canadians to ensure their financial strategy is up-to-date. It's a necessary step to getting on track, staying on track, or fast tracking towards those re-focused financial goals."

The survey also found that an RRSP on its own isn't cutting it for Canadians. Only 19 per cent of respondents believe an RRSP alone meets their saving and investing needs and 12 per cent prefer other investment options altogether. Close to a majority (43 per cent) believe in a combination of an RRSP and other investment options.

Other investment options include another registered account like a TFSA (51 per cent), real estate (11 per cent), and non-registered investment accounts (10 per cent). While responses are relatively consistent from generation to generation, those aged 18-34 are 11 per cent more likely to use or consider real estate investments despite market conditions such as rising interest rates and inflation.

"The data highlights the important fact that there is no such thing as a one-size-fits-all approach to investing. Canadians are all different and their needs are constantly changing," said Petrera. "These account types offer various benefits and restrictions both immediately, and longer-term. With so many factors to consider for every account type and individual situation, partnering with a trusted professional can help Canadians navigate what's best for them through a tailored approach to personal finance."

The RRSP deadline is March 1, 2023, and Canadians could be eligible to contribute up to 18% of their previous year's earned income, to a maximum of $27,230, plus unused carried forward room (subject to any pension contribution adjustments). Click here for more information.   

The data referenced comes from an online survey conducted with 1,666 English-speaking adult Canadians, 18 years of age of older. The survey was conducted by Redfern Research between January 27th and 29th, 2023. A representative sample of this size would be considered accurate to within ±2.4%, 19 times out of 20.  Results have been weighted using the latest Statistics Canada data to be representative of the Canadian population as a whole.

About Edward Jones Canada

Edward Jones is a full-service investment dealer which provides a range of investment products, services and solutions to retail investors. We have close to 850 financial advisors serving clients in Canadian communities from coast-to-coast. A member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund, the firm is also a participating organization in the Toronto Stock Exchange. Edward Jones is a proud supporter of partners in the health and wellness space such as The Terry Fox Foundation, whose mission supports initiatives positively impacting cancer research. For more information, visit edwardjones.ca.

SOURCE Edward Jones

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