Faced with rising inflation, many Canadians have no capacity to contribute to their RRSP

Edward Jones study shows majority of Canadians not planning to contribute to their accounts

Faced with rising inflation, many Canadians have no capacity to contribute to their RRSP

A growing percentage of Canadians are unable to contribute to their RRSPs due to financial constraints.

A new report issued by Edward Jones Canada reveals how Canadian investors are approaching this year's RRSP season as they face growing prices and the ongoing COVID-19 epidemic.

According to the study, 33% of Canadians want to contribute to an RRSP this year, similar to last year. The percentage of Canadians who want to give the maximum amount stayed constant at 10%.

The capacity of Canadians to pay their contributions may be harmed by rising inflation and the resulting increases in living and lifestyle expenditures. Just over half (55%) of those who didn't contribute to an RRSP this year – which was up 11% from the previous year – claimed they couldn't afford it.

Nearly a third of Canadians (29%) cannot afford to invest their money at all, while a quarter (25%) regard debt repayment as a top financial priority. The remaining 45% of the people who are not contributing to their RRSP this year are focusing on other types of accounts or investment options.

Canadians value TFSA contributions (49%), non-registered investment accounts (17%), and real estate purchases (17%) above RRSP contributions (8%). The 18–34-year-old age group is the most likely to contribute to an RRSP (42%), and they are also the most likely to contribute the maximum amount (16%).

The total proportion of people in this age group who contributed grew by 7% year over year. This age group, on the other hand, was 13% more likely to believe that COVID-19 has harmed their capacity to save for retirement (57%), and 8% more likely to have modified their financial priorities because of the epidemic (39%).

Overall, 44% of Canadians believe the epidemic has harmed their capacity to save for retirement, while 31% have shifted their financial priorities as a result of the pandemic. Despite this, almost half of Canadians (49%) said they manage their finances without the help of a financial counselor.

David Gunn, President of Edward Jones Canada, said: "We are experiencing high inflation, economic volatility, and uncertainty around the pandemic, all of which impact the unique financial situation of Canadians. Understanding the value of a comprehensive, long-term financial strategy that considers evolving financial priorities, as well as the environment around us, is the key [for clients to stay] on course towards [their] personal and financial goals."

Among respondents working with a financial advisor, nearly three quarters (73%) prefer personal relationships, whereas a professional one is preferred by the rest (27%). A personal connection is characterized as one that appreciates a client's life and circumstances as much as their investments, whereas a professional relationship prioritizes outcomes and returns more than life and circumstances.