Canadians Dipping into Retirement Savings Too Early

Further, nearly half of those surveyed who have made at least one withdrawal from their Retirement Savings Plan (RSP) said they do not intend to pay it back, the Ottowa Business Journal reports. The investment behavior study found those who have withdrawn from their RSPs have taken out an average of $18,000.

Another concerning finding was, while more than half of those surveyed withdrew their money to buy, build or get a mortgage for a new home or to pay down debt, as many as 20% of investors take money out of their retirement savings to pay for day-to-day living expenses.

The findings of the investment behavior study add to the concerns unearthed by a separate retirement study conducted by Scotiabank in May 2006. In that study, according to the Ottawa Business Journal, 42% of respondents said they would get a part-time job if they ran out of retirement income, with 53% of non-retired investors saying they were worried they would outlive their retirement income and 30% admitting they have done very little planning for retirement.

The retirement study found Canadians over the age of 39 expected to live for about 20 years after the traditional retirement age of 65. Nearly one-fifth of non-retired investors surveyed estimated they will need $100,000 or less of retirement savings, while 56% of retired investors said they do not know how much money they will need.

The investment behavior study surveyed 1,026 Canadian investors aged 18 or older, and was conducted for Scotiabank by Decima. The retirement study surveyed 1,200 Canadians aged 39 years and older with less than $50,000 in investable assets who were sole or shared household financial decision makers.