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moneysense.ca, 12/02/08
RRSP: By the Numbers
As I’m fighting a cold and fever, I thought I’d get away with a short post on RRSP statistics today:
- Deadline for a contribution for the 2007 year: February 29, 2008
- Maximum contribution amount for 2007: $19,000
- Percentage of tax filers eligible to contribute to a RRSP*: 88%
- Percentage of eligible tax payers making a contribution*: 31%
- Percentage of contribution room used up*: 7%
- Median National contribution*: $2,730
- Average National contribution*: $5,221
* Statistics Canada data for 2006 contributions.
moneysense.ca, 12/02/08
Interesting to note only 7% of available contribution room is used, and that median contribution is only $2,730 while average is $5,221.
I wish there’s a way for people to “sell” their left-over contribution room to others who need it.
The ability to roll over your unused room from year to year is one of the wonderful things about RRSPs. For various reasons I’ve never been able to use all my contribution room in any given year, and this year my maximum contribution amount has grown to $47K. A bit beyond my means, but at least I don’t have to worry about going over my limit!
Hope you feel better.
FJ: It’s also interesting that the average is almost twice as large as the median. It suggests that a fraction of taxpayers make contribute the max and then it drops off quickly.
brad: A lot of people have tons of RRSP room built up because in their younger years it is hard to come up with contributions when there are so many other demands for cash. There is also the little matter of paying down the mortgage.
I’m happy to see that I typically beat the average, but I’m like some others here who have seen their unused room grow.
However, being out of school and losing various other tax deductions, I plan to focus more on RRSP investment and catch up to my unused limit in the next 5-7 years.
I must be weird. I max out my RRSP every year. I wrote an article about being a “manic RRSP maxer” yesterday. I think my brain is wired different as I’ve been maxing out my RRSP every year for about 8 years now and have zero available space. I only wish the percentage we could contribute wasn’t limited by our total income. My income is pretty average, I just live very frugally.
Squakfox – same here. I just wrote a post today detailing where to put your money once RRSP contribution room is gone, becasue I’m dealing with that very problem. It would be nice if everyone could enjoy $19,000 in contribution room every year regardless of income level. Frugality should be rewarded, don’t you think
Me too, I have maxed out every year and have zero carryforward room. Since I have pension adjustment from my DB plan, my contribution room is more than halved. Good thing is that I do not feel ‘guilty’ paying down mortgage a.s.a.p. without worrying about which comes first.
I’m one of those people that doesn’t max out my RRSP and has $80k contribution room.
But my situation is rather different being that I work in the US and can’t seem to get the tax puzzle to work out so that I see tax refunds for any contributions (I’m actually carrying forward contributions already made). So instead, we max out my husband’s RRSP + to make up some of his unused contribution limit and then we make substantial pre-payments on the mortgage.
One of these days I’ll be working in Canada making $200k and then I can use up all that contribution room at the highest bracket.
I only contribute 10% of my income to RRSP, so my unused contribution limit goes up every year. I sometimes consider putting in more, but I only have so much money to save and I have other goals besides retirement. It’s nice to see that even though I don’t max it out, I’m still contributing more than the average. And should I ever sell my vacation property I’ll have plenty of room to soak up the capital gain.
OT, I have a question about RRSP and hopefully some gurus here could give me an answer. I usally max out my RRSP limit. However, I am expecting a baby in July so this year my income will be reduced a lot so I will definitely not max out my RRSP this year. But I am still contributing to company’s RRSP plan as the company will match 50% of what I contribute up to a limit. This is free money and I see no reason why I should not give it up. So my question is, next year when I fill my tax return form, do I have to claim the RRSP I bought this year? Let’s say I will buy $5000 RRSP this year within my RRSP limit, next year do I have to claim this $5000 for tax return or can I wait for another two years when I go back to work full time and have a higher tax bracket then claim this amount?
Thansk in advance.
katie,
You can carry your contribution forward to future years. I don’t know if there’s a limit to how many years.
I’ve been managing my self directed RRSP for over 10 years and am always trying to learn to do it better.
My question is:
When one trades options, you can put “insurance” on you stock holdings. ie. If one holds XYZ stock and it goes up from 100 to 150, you can buy a Put option at 140 dated 6 months later. It would cost you 3$ a share (or so ) to do that. So if XYZ goes down you can always sell it for 140 six months later.
I don’t believe we can trade options in our RRSP (though , I’m not sure). But how do we put “insurance” on our RRSP holdings?
Any ideas?
If you don’t want to post then please e-mail me.
the-lex@techie.com
katie: Contributing to a RRSP and claiming a deduction are two distinct steps. You can certainly make a contribution and opt not to deduct in that financial year. See Schedule 7. Any contribution you made in the year but did not deduct will be available for future years.
Young Grasshopper – You can trade options in your RSP. You would be advised to call your discount broker and ask them what paperwork you need complete to have this added to your account. Make sure you specifically ask for the ability to trade puts, some brokers will only give you the option of purchasing calls unless you specifically ask for puts (e.g. Scotia McLeod Direct Investing)