More Canadians are withdrawing cash from their retirement funds for home purchase, but worryingly, many are doing so to cover everyday expenses.
A report from BMO shows that 40% of Canadians have taken cash from their RRSP with 27% doing so to buy a home, 21% for an emergency, and 20% to pay off debt.
However, 23% of those who have withdrawn from their savings plan have done so to meet everyday costs.
"We've seen a steady increase in the amount of money Canadians are withdrawing from their RRSPs to meet short-term needs; this should be considered only as a last resort," said Robert Armstrong, Vice President, Multi Asset Solutions, BMO Global Asset Management. "There are tax consequences associated with withdrawing from your RRSP, so be sure to consult a financial professional to ensure you have exhausted all other options that may be available to you."
The average withdrawal of $20,952 revealed in the annual survey is a $3,739 increase from last year.
Regional Breakdown
Region |
% of Canadians who |
Average amount |
Top reason for making an |
National |
40 |
$20,952 |
To buy a home (27 per cent) |
Atlantic |
41 |
$23,505 |
To buy a home (30 per cent) |
Quebec |
37 |
$22,498 |
To buy a home (35 per cent) |
Ontario |
39 |
$22,668 |
To buy a home and to help pay |
Prairies |
45 |
$12,374 |
To help pay for living expenses |
Alberta |
43 |
$15,769 |
To help pay for living expenses |
B.C. |
42 |
$20,613 |
To pay off debt (23 per cent) |