The study released, and conducted by Pollara for Bank of Montreal from Dec. 14-19 asked 1,500 people how much during the year they had withdrawn from their RRSP. The online survey, is considered accurate to within 2.5 percentage point, 19 times out of 20.
30% of people in the study stated that their number one reason for withdrawals was because of rising real estate prices.
Nationally, the second most popular reason to take money out of the RRSP after housing was to help pay off living expenses. Next was to pay off debt and emergencies, both at 18%.
“It’s concerning to see that so many Canadians are dipping into their RRSPs to meet short-term needs, which should only be considered as a last resort,” Chris Buttigieg with BMO Wealth Management said in a release announcing the results of the poll.
They study found a 38% of Canadians have withdrawn money from their RRSP Before 71.
On average, Canadians had withdrawn $17,213 during the year, an increase from $15,908 a year earlier. Unless it’s for a reason the CRA deems to be legitimate, such as to buy a home or to go to school, anyone who took out that much from their RRSP last year would lose $5,163.90 right off the bat to the federal withholding tax.
The consequences of withdrawing money could be very serious.
“Before withdrawing from an RRSP, speak to a financial professional to make sure you have fully considered the ramifications of the early withdrawal tax consequences, and to consider any additional options that may be available to you,” Buttigieg said.