The Canadian Capitalist linked to a Stats Canada article about Canadians and their RRSP contributions. I found some of the results interesting:
“As in recent years, almost 86% of taxfilers were eligible to contribute for the 2005 tax year. Of these, about 31% actually made contributions.” – This makes me feel glad about our situation, that we are certainly in that 31% minority, but it is a bit disturbing that the vast majority of people (69%) did not make an RRSP contribution. What does this say about our education system? There is not a single mandatory high school course in B.C. that teaches students about RRSPs (or anything financial related) yet it is mandatory to take all sorts of other useless (relatively-speaking) courses.
The median contribution from Vancouverites was $3,160. I am proud of the fact that we are contributing almost double that amount per person (effectively maxing out our contributions), while definitely not making double Vancouver’s median income. It is going to be a challenge next year as our effective income in 2006 has increased significantly since my wife worked for all of 2006 (compared to half of 2005) but we are committed to contributing our 18% which should be easily achievable just by reducing our loan payments. Overall in Canada taxfilers contributed $30.6 billion, which represents “only about 7% of the total room available to eligible taxfilers.” I think the reason that is so low is because of the 31% statistic above. At least I think that the 7% is including all taxfilers, including those who did not contribute at all.
Possibly some of us contribute relative little to RRSPs is due to the pension plan operated by our employer. My personal situation leaves myself and spouse in the un-enviable position of earning as much or more once we retire as we currently do. Since we do not forsee a reduction in our tax brackets, and my wife may see her income actually incerase once she retires, we are now choosing to invest in non-registered instruments, having accumulated as much as we want in our Registered Plans.
Ah, I totally forgot about the RRSP pension plan “reduction” or whatever they call it. The only time I had that reduction was when I worked at a grocery store as a young chap and that grocery store employees’ union had a pension plan.