Missed Opportunities
Despite their attractiveness, RRSPs aren't utilized to their full capacity by Canadians.

Here are some statistics:

Many people don't use them
Just 53% of people surveyed by Royal Bank Financial Group at the end of 2000 said they planned to contribute to an RRSP for the 2000 tax year. But most don't put in the maximum. Statistics Canada reports that Canadians use only about 12% of the total amount they are entitled to contribute. They are entitled to contribute with a median contribution of only $2,600 in 2003. For 2004, StatsCan says tax filers contributed only 8% of their available RRSP contribution room and only 33% of those eligible contributed to their RRSPs at all.

Low RRSP savings won't provide enough income in retirement
Another survey found that the average Canadian has about $67,600 saved in an RRSP by age 65. Put that into a RRIF earning an average 6% a year, and you'd have an after-tax income of less than $4,000 a year, rising to about $7,600 a year by age 89 - assuming you withdraw the required annual minimum.
Source: Statistics Canada: Survey on RRSPs

You will need more money than that to provide a decent retirement income.
If you want an annual after-tax income of about $30,000 a year, you'll need to have about $527,000 in your RRSP at age 65 -- assuming when the funds are invested, you can earn an average annual return of 6%. If you could earn an average 10% per year, you'd need to start with about $350,000.

An RRSP contribution at age 20 is worth more than one made at age 30.
If you start contributing a monthly amount to an RRSP at age 20 and contribute for only 10 years, you will have more in an RRSP at age 65 than someone who didn't get started until age 30 and contributed the same monthly amount for the next 35 years.

Too-much-money myth
Here is a myth of RRSP investing that you need to ensure you don't get trapped by: RRSPs mean too much money at retirement. The myth is that too much money in the RRSP will trigger a clawback (reduction of payments) of some or all of the $453 a month Old Age Security pension all seniors are eligible for.

You should consider the following tax statistics:

• 99% of seniors got some form of OAS
• 95% get the full OAS pension
• Clawback are not an issue for the vast majority of seniors as they start at $57,879 annual income
• A person must have an income of $94,148 before the $5,440 annual pension is phased out entirely
• As such, RRSP saving makes sense for almost all Canadians, regardless of age or income because of the tax refund
• The only exception might lie with low-income Canadians who might have difficulty in saving enough to make the tax refund investment meaningful

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