The Investment Dealers Association of Canada is worried that most people are unprepared to fund their retirement.

In the latest edition of its Wealth Watch report, the IDA finds that many investors do not have a proper retirement plan in place. “Without a proper plan in place, we are concerned that many investors do not have an accurate picture of what their retirement income needs will be, or what amount of annual savings will be necessary to provide this required level of retirement income,” the IDA says.

Apart from the overall lack of retirement planning, the IDA report also suggests that the RRSP contribution participation rate is low, contributions aren’t being maximized, few young investors are making use of RRSPs, and RRSP withdrawals are more common.

The IDA reports that total unused RRSP room has ballooned from approximately $250 billion in 2000 to almost $350 billion at the end of 2003. “Many Canadians may in fact not be putting aside enough funds for retirement to provide the standard of living they hope for or are currently accustomed to,” it warns.

It adds that middle class Canadians may be most at risk. Low income earners can rely on government income security programs, but middle income earners “will increasingly have to rely on their retirement savings to bridge the gap,” the IDA says.

The IDA is also concerned about the use of RRSPs for non-retirement income. “The withdrawal patterns indicate that increasingly, individuals are using their RRSPs as a means by which to smooth income fluctuations during their non-retirement years as opposed to their intended purpose of accumulating savings for retirement.”

It says that higher contribution limits would help Canadians save enough for their retirement. This is particularly important as the percentage of workers covered by a Registered Pension Plans today is lower than it was 10 years ago.

To help tout the importance of planning, the IDA says it will be publishing a retirement planning guide to help educate investors in the coming months.