Michael Kane
Sun
Investors in British Columbia are counting on registered retirement savings plans and their homes to fund their retirement, poll findings released Wednesday show.
They are more likely to own RRSPs than other Canadians and they put more in them, according to the 2006 TD Waterhouse Investor Poll.
But they are also the most likely — 46 per cent versus 39 per cent of all Canadians — to say they will be relying mostly on the equity in their homes to pay for their golden years.
“The value put on home equity is not that surprising given the housing boom and the pockets of strength that you have in Vancouver and Victoria,” said Patricia Lovett-Reid, senior vice-president with TD Waterhouse.
“But I do worry that people are not diversifying. Your home should be counted on but it is pretty hard to eat a brick if you decide to stay there.”
More than eight in 10 Canadian investors now own RRSPs and the average contribution has been climbing since 2002, the poll shows.
The most dramatic advances this year are in B.C. where the percentage of investors with RRSPs is up from 69 per cent last year to 83 per cent and the average contribution leads the country at $5,690.
Across Canada, the average contribution is up 30 per cent from 2002 to $5,100 in 2005.
The B.C. findings did not surprise Gina Macdonald, a fee-only financial planner with Vancouver’s Macdonald. Shymko & Co.
“People still want to maximize their RRSPs and it may relate to greater economic awareness in B.C. because a lot of people retire here.”
Macdonald noted that younger people are also embracing RRSPs to take advantage of the Home Buyers Plan which allows them to withdraw up to $20,000 toward their first home without tax penalties.
Lovett-Reid said British Columbians are working smarter because they recognize that time is precious.
“You really do get it in Western Canada that there is a difference between having a good retirement and a great retirement. The potential is really unlimited for us to do what we want to do in retirement.”
Some 57 per cent of all Canadian investors consider their home to be an investment that could be used to fund their retirement, but Lovett-Reid urged caution.
“Real estate values fluctuate over time and by region, and the further you are from retirement age, the more risk there is that your home equity may not be as high as you expect when you retire.
“Also, some people find that when they reach retirement age, they want to continue living in their home, so keeping that option open is important.”
In other findings:
– There was a large gender gap in average contributions with men socking away $5,930 compared to $3,990 by women.
– Slightly under half of 1,000 investors polled have calculated how much they believe they will need to retire but the amount has climbed dramatically from $530,000 in 2003 to $894,000 this year.
The poll, conducted TNS Canadian Facts, is considered accurate within plus or minus 3.1 percentage points, 19 times out of 20.
© The Vancouver Sun 2005