CBC recently published an article discussing a BMO report that found 60% of Canadians feel anxiety when it comes to the annual RRSP contribution deadline. Debt is considered a major problem because many Canadians feel worried (or should feel worried) more about what they owe over what they have saved. According to Statistics Canada, household debt to income ratio is at a record high. I thought about setting up a RRSP this year, but figured I’d be better off paying down debt, student loans, mortgage … hence I was very intrigued to come across another CBC article published this week titled ‘Gen Y too busy paying off debts to save for retirement’ , there is comfort in knowing you are not alone. And there is more comfort in the first sentence, “Canadians in their mid-30s to early 40s fretting over having never contributed a cent to an RRSP need not worry, financial analysts say. They still have a lot of time to plan for retirement”. Though I wouldn’t have described myself as “fretting“ exactly, I am certainly in the company of those “having never contributed”. There is more good advice to be found in the CBC Business pages:’ Looking to invest? Pay down your mortgage instead ’, this article claims that “in a volatile market, a mortgage is a safe investment with a guaranteed rate of return”. The author explains that if you have a mortgage, making an extra payment instead of a RRSP contribution is a better idea. He recommends this mortgage calculator to help figure out what an extra payment will save you. Of course this advice is for those with some extra savings to invest this year… The “Gen Y” article quotes Actuary Malcolm Hamilton advising against RRSPs for those in their 30s:
“I think the more sensible approach… is to work hard on getting the debt down and eliminated and then save for retirement once you’ve accomplished that.”
I’m going to put off worrying about retirement saving for this year, but for those who are going to worry, check out A user’s guide to RRSPs
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