Poll: Young Canadians not focused on retirement

Young Canadians are shying away from RRSPs.

According to a Royal Bank poll, only 39% of Canadians aged 18 to 34 are invested in RRSPs. That’s the lowest level in almost a decade. To make matter worse, 45% have not even began saving for retirement.

For young Canadians, retirement is just not a financial priority with it being ranked seventh overall. 26% are concerned with retirement savings compared with 56% focused on reducing debt, 45% saving for a “rainy day” and 44% on home ownership.

“We’re seeing other financial priorities become increasingly top of mind for younger Canadians who may not realize they are missing out on one of Canada’s best income tax savings vehicles, as well as the potential to grow their investments more quickly,” said Lee Anne Davies, head, retirement strategy, RBC.

Those who are home owners are seemingly under-utilizing the RRSP benefits available to first-time homebuyers. A federal government program allows for tax-free RRSP withdrawals to help finance the first purchase of a new home. Only 6% of 18 to 34-year-olds withdrew money from their RRSP to purchase a home in the past year.

“Younger Canadians’ relatively low participation in the government’s first-time homebuyer’s program may in part reflect a lack of understanding about what an RRSP can do for you well ahead of your retirement years,” added Davies.

2010 RRSP Fast Facts

• The overall number of Canadian adults who have RRSPs jumped to 61% , up from 54% in 2009.
• Canadian RRSP holders in the 18-34 age group are most likely to maximize their RRSP contribution (33%) for the 2010 tax year.
• A quarter of Canadians with RRSPs (24%) plan to maximize their contribution for 2010.
• 35% of all Canadians make regular weekly or bi-weekly contributions to their RRSPs with Canadians aged 18-34 making up almost half (47%) of this group.