Despite market turmoil, Canadians are saving more in their RRSPs, led by strong growth among millennials, according to Bank of Montreal’s (BMO) annual RRSP study published Tuesday.
The average amount held in RRSPs nationally is $101,155 — a 21% increase from 2016, when the amount held was $83,635, BMO says.
Millennials account for the greatest increase in amounts held, at 87% more in 2018 compared to 2016. In dollar figures, amounts held by millennials rose to almost $29,000 from about $15,000 in 2016.
Over the same period, amounts held by baby boomers in RRSPs saw a 30% increase, to about $179,000 from $137,000.
The study also examined investor attitudes. Amid greater market volatility, 71% self-identified as “cautious” investors, which represents an opportunity for advisors and investors to connect to “seek out best options,” said Robert Armstrong, vice-president of multi-asset solutions at BMO Global Asset Management, in a release.
Canadians aren’t confident in their investment know-how, with 42% of survey respondents identifying themselves as “not knowledgeable,” and 29% labelling themselves as “newbie” investors.
“While the markets may seem uncertain, investors at all levels can receive tailored advice to help them structure their retirement savings and to ensure their investments are growing,” Armstrong said.
Timing might also be a consideration for advisors hoping to connect with clients: the study finds that making RRSP contributions before the deadline is top of mind for Canadians, with 62% saying they plan to make a contribution or have already done so.
Those who already contributed put in an average of $5,247.
Regionally, Canadians in the Prairies hold the greatest amounts in their RRSPs, at nearly $130,000. Those in the Atlantic provinces hold the least, at about $78,000.
Some RRSP funds will be used as home down payments. While the frequency of RRSP withdrawals before age 71 has decreased by one-third since 2017, the survey finds that those who decide to dip into savings are withdrawing greater amounts—an average of $25,779 in 2018 compared to $20,952 in 2017, mostly for home purchases.
About the survey: The ninth annual BMO RRSP survey was conducted by Pollara Strategic Insights via an online survey between Nov. 30 and Dec. 5, 2018, with an online sample of 1,518 adult Canadians. Data have been weighted using the latest census information to be representative in terms of age, gender and region.