According to a new report from the Bank of Montreal (BMO), Albertans lead the nation in several categories when it comes to planning for retirement.
The fifth annual BMO registered retirement savings plan (RRSP) study concluded that 79 per cent of people living in the Alberta region have an RRSP, compared to only 73 per cent nationally; 48 per cent of Albertans already made an RRSP contribution before the 2014 deadline, compared to 42 per cent nationally; and Alberta tied with Quebec for first place with 69 per cent of respondents saying they will be making an RRSP contribution for 2014.
“The most important factor in the decision to contribute to an RRSP will often be understanding how the federal and provincial tax brackets work in the province you reside in and where your own personal income falls in any given year,” said Adam Teasdale, financial planner for Veracity Financial in Lloydminster. “With many people in Alberta, as well as Saskatchewan for that matter, reporting income at higher levels, it isn’t surprising that a higher percentage of people have been making these tax deductible contributions.”
The study also found that the reasons Canadians do not make retirement contributions is because they either don’t have enough money or other expenses take priority. BMO also reports that 73 per cent of Canadians now have RRSPs, compared to 64 per cent at this time last year.
Teasdale says Lloydminster has a growing economy, and he finds that people who do their financial planning with his firm make an effort to save for their retirement and are making contributions to their RRSPs.
“I feel people are finding the two-fold benefit of a (RRSP) by realizing the tax savings they receive now with their contribution, and the retirement savings that are being created by regularly making these deposits,” he said in an email.
Teasdale says Alberta’s economic situation can influence savings choices for Albertans. With talk of falling oil prices and a possible recession, he says some people may adjust their retirement savings accordingly.
“It will likely impact the decision to contribute or continue to contribute to their RRSP for some people, depending on factors such as a job or income level change, but these factors all happen on a very individual and personal level,” he said. “Consulting a financial planner prior to making your contributions should happen every year, not only in times of falling oil prices.”
Overall, Teasdale’s advice to Albertans is to commit to a personal financial plan.
“Pay down debt, set aside funds for retirement on a regular basis and work with a certified financial planner with whom you trust,” he said.
BMO’s survey was conducted by the Pollara market research firm using an online sample of 1,300 Canadians. This group was made up of 800 non-retirees ages 18 to 64 and 500 retirees of any age. Pollara conducted the survey from Nov. 12 to Nov. 17, 2014.