More using RRSPs for homebuying, everyday costs

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However, 23% of those who have withdrawn from their savings plan have done so to meet everyday costs.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
have made an RRSP
withdrawal

Average amount
Canadians have
withdrawn from
RRSPs ($)

Top reason for making an
RRSP withdrawal

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
for living expenses (26 per cent)

Prairies

45

$12,374

To help pay for living expenses
(36 per cent)

Alberta

43

$15,769

To help pay for living expenses
(29 per cent)

B.C.

42

$20,613

To pay off debt (23 per cent)

       

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