Almost a third (32%) of millennials admit they are “not at all knowledgeable” about retirement savings plans (RSPs), according to new survey by TD.
The survey found that only 50% of those aged between 18-33 know that the money in an RSP can help to purchase their first home and just 28% know RSP funds can help pay for full-time education or training as a mature student.
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“Saving enough money for a down payment on a home can be difficult for many younger Canadians, so the ability to withdraw up to $25,000 from an RSP, or up to $50,000 for a couple, can help make it easier,” said Linda MacKay, senior vice president, personal savings and investing at TD Canada Trust.
“Building up an RSP from the earliest possible moment not only helps you save on income tax now, but could also help get you into your first home more quickly and lower your monthly mortgage payments down the road.”
According to the survey, of those not saving enough for retirement, more than 40% say they can’t afford to contribute right now because there are too many demands on their money, while 28% said they’re currently saving for other priorities.
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“It’s easy to see how younger Canadians find it difficult to make regular RSP contributions when there are so many things they want to save for now,” said Lee Bennett, senior vice president, TD Wealth Financial Planning.
“But knowing you can use part of your RSP for some more immediate priorities, in addition to reaching your long-term financial goals, can make it easier to redirect at least part of your savings into one.”