Women are 18 per cent less likely to know how much they need for retirement
BMO Financial Group’s 11th annual Registered Retirement Savings Plan (RRSP) study discovered that amid the financial challenges of 2020, the amount Canadians are holding in their RRSPs has increased. However, findings also indicated a steady decline in knowledge of the benefits and features of the account.
The average amount held in RRSPs nationally is $112,295, a 3.3 per cent increase from 2019 ($111,929) and a 41 per cent increase from 2015 ($79,492). The overall amounts Canadians have contributed or plan to contribute has decreased by 15.5 per cent since 2019; however contribution amounts for this year are 15.8 per cent higher than the survey found in 2018. 12 per cent of Canadians did not contribute this year due to the pandemic.
“Investors need to consider long-term factors, such as increasing cost of living and longer average life expectancies, when planning for retirement,” said Robert Armstrong, Director, Multi-Asset Solutions, BMO Global Asset Management. ”With these challenges in mind, it’s encouraging to see a national increase in RRSP holding amounts.”
RRSP knowledge on the decline
While Canadians continue to regard RRSPs as an effective retirement planning strategy, the study found knowledge levels about RRSPs have steadily declined over the past five years:
- 71 per cent of Canadians know how to contribute to an RRSP, an eight per cent decrease from 2015
- 61 per cent of Canadians know the RRSP contribution limit, a 12 per cent decrease since 2015
- Only half (50 per cent) of Canadians are aware of what investments are eligible to be held in RRSPs, a 10 per cent decrease from 2015
- Fewer than half (44 per cent) of Canadians are aware that RRSPs can hold ETFs, while 79 per cent are aware that RRSPs can hold mutual funds
“RRSPs are an important investment solution in Canadians’ retirement planning toolbox. With the inherent complexities of RRSPs, professional advice is valuable to help investors meet their long-term financial goals,” said Mr. Armstrong.
The gender gap
The study found a gender gap in retirement planning and RRSP knowledge:
- Among those surveyed, women are nine per cent less likely to know how to contribute to an RRSP and 10 per cent less likely to know the difference between RRSPs and TFSAs compared to men
- Only 62 per cent of women know the RRSP contribution deadline and 55 per cent know how much they can contribute to the account, compared to 70 and 67 per cent of men, respectively
- Fewer than half (41 per cent) of women know which investments can be held within an RRSP
- Women are 18 per cent less confident than men in their retirement plans, and 18 per cent less likely to know how much money they will need for retirement
- Women were more likely than men not to be contributing to their RRSPs this year because of pandemic-related reasons (15 per cent versus 9 per cent)
- Women are less likely to have withdrawn funds from their RRSPs before the age of 71, with 25 per cent of women having done so compared to 31 per cent of men
BMO offers the following resources for women interested in building their confidence in personal finance and investing:
- BMOforWomen.com is regularly updated with content to help inspire financial confidence
- The award-winning1 podcast Bold(h)er features inspiring stories of women making bold moves in their careers and businesses
- BMO investment professionals provided access to online training to promote and engage women investors and business owners in tailored, goals-based conversations
BMO offers award-winning2, personalized advice to help Canadians meet their financial goals. For further information on this and BMO’s investment plans, please visit www.bmo.com/myplan.
For more information on BMO Registered Retirement Savings Plan Accounts and opening an account, please visit www.bmo.com/rrsp/.
|1BMO for Women’s Bold(h)er podcast received recognitions from Hermes Creative Awards Platinum and AVA Gold|
|2BMO received the top overall score in JD Power’s 2020 Canadian Retail Banking Advice Study|