Many Canadians Taking Retirement Plan Payouts

A BMO Financial Group news release about its survey said the study, conducted by Leger Marketing, also identified as reasons Canadians are withdrawing money early from their RRSPs:

• Emergencies, such as the loss of a job (36%),
• Paying off everyday debt, such as credit card balances (26%),
• A house purchase or home renovation (25%),
• Education – either their own or their child’s (10%), and
• Vacation/Leisure (6%).

“These survey results are worrying; they indicate that many Canadians are not treating RRSPs for their intended use,” said Caroline Dabu, Vice President, Retirement & Financial Planning Strategy, BMO Financial Group, in the news release. “Generally, withdrawing money from your RRSP prior to retirement is something to be avoided if possible. Your RRSP should be a critical component of your overall retirement plan and should only be accessed at retirement.”

Other findings included:

• Canadians 35-54 years of age are the most likely to have withdrawn money from their RRSP.
• Those in British Columbia (48%) are more likely than those in other provinces to have pulled out money for an emergency.
• Those in the $100K+ income bracket are more likely to say they withdrew money from their RRSPs for their child’s education or their own  education (18%).

The online survey was conducted from January 31 – February 2, 2011, with 1,510 Canadian adults.