RBC Debunks Common Misconceptions About RRSP Saving And Investing

Average Canadian starts saving for retirement at age 32

TORONTO, Feb. 20, 2013 /CNW/ - With the Registered Retirement Savings Plan (RRSP) contribution deadline for the 2012 tax year approaching, RBC provides clarity regarding RRSP myths and encourages Canadians to start saving for retirement sooner. According to the 23 ^rd Annual RBC RRSP Poll, on average, Canadians say they started saving for their retirement at age 32 and one-quarter of Canadians (26 per cent) have not started to save for retirement.

"There are common misconceptions around savings and investing that may be keeping Canadians on the sidelines," said Jason Round, head, Financial Planning Support, RBC Financial Planning. "The first step is getting in the game, it's important to start no matter the amount you have to save and the earlier you start the better."

Canadians are getting the message about saving for retirement through regular contributions. Among those who have RRSPs and who have contributed or plan to contribute for the 2012 tax year, six-in-10 say they make regular contributions. Regular contribution plans are the top means of contributing to RRSPs with four-in-10 (37 per cent) Canadian RRSP holders between the ages of 18 to 54 doing so.

Round debunks the following misconceptions when it comes to RRSP saving and investing:

1. Myth: Be wary of market volatility and delay starting up an automatic plan given market downturns. Reality: Automatic contribution plans help create a regular savings habit and take the guesswork out of timing of the market.
2. Myth: I need to have a sizable lump sum to be able to invest. Reality: Through regular savings and the benefit of compounding, a little can turn into a lot. Set up manageable pre-authorized contributions that line up with your pay day and watch your savings grow.
3. Myth: It's easier to catch up on RRSP savings when you are older and more established. Reality: While you may be more established when older, you may also have more financial responsibility (mortgage, children). Contributing early and regularly allows you to apply a 'pay yourself first' approach to managing your finances and the added benefit of compounding
4. Myth: Investing is complicated. Reality: There is an investment approach for everyone. It can be as simple or complex as you like; mutual funds offer professional investment management, portfolio solutions take care of the asset allocation and do-it-yourself brokerages offer a range of investment products. A financial advisor can help you find investment solutions that work for you.
5. Myth: An RRSP only benefits those in the top tax bracket. Reality: RRSPs are about more than a tax refund. They allow you to save for the future on a tax-sheltered basis and can include a variety of investments. There are other savings vehicles, like a Tax-Free Savings Account, that you may consider depending on your own circumstances and goals for the future.

About RBC's financial planning advice, resources and interactive tools The RBC Advice Centre offers free online advice, resources and tools regarding retirement and estate planning including RRSPs, the RSP-Matic® Savings Calculator and updates on the federal government's RRSP First Time Home Buyers' Plan. In addition, RBC's myFinanceTracker, a comprehensive online financial management tool, offers all personal RBC online banking clients the ability, at no cost, to create a set budget and track their spending habits and to access H&R Block tax-related apps in the new myTax Centre, to help manage and plan their taxes.

About the 23 ^rd Annual RBC RRSP Poll The 23 ^rd Annual RBC RRSP poll was conducted by Ipsos Reid between October 24 and November 27, 2012 via a random sample of 1,225 Canadian adults in the general population (aged 18 and over). The results are based on samples where quota sampling and weighting are employed to balance demographics and ensure that the sample's composition reflects that of the actual population according to Census data. Quota samples with weighting from the Ipsos online panel provide results that are intended to approximate a probability sample. A weighted probability sample of 1,225 Canadian respondents, with 100 per cent response rate, would have an estimated margin of error of ±3 per cent, 19 times out of 20.

SOURCE RBC

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