Wednesday, February 23, 2011

I'm Confused...


Err, well, actually it's RRSP time.

I don't know about you, but usually this time of year I feel like I'm being SWARMED with financial institutions trying to shill their wares. It's front and center on most of the websites I frequent.

Put money in your RRSP! It's the smart thing to do! Do it now before it's too late!

It's 24/7 in your face advertising until March 1st.

But this year... it isn't. I don't know if I've just become oblivious to it, but it feels like the banks aren't pushing RRSPs nearly as hard as they've done in recent years. Do they know something I don't?


Adding to my confusion are the articles I'm seeing relating to RRSPs right now, such as You Can Have Too Much Money In Your RRSP over at Everyday Money, and The Problem With RRSPs over at MSN Money.

Wait, what?

It seems that after years of pushing this type of investment the banks are pulling an about face: don't put money into your RRSPs, pay off your debt instead.

That's fine and dandy that you want us to pay off our debts; at a debt load of 148% for every dollar earned, I can understand you wanting us to pay off our debts as well. But after years of lamenting that the younger generation is taking so long to enter the work force, buy their first house, and generally hit the major milestones... are you sure you want to be telling us to discount or put off our retirement contributions? I agree fully that the overall debt load of Canadians is too high and NEEDS to be reduced, but do you really want to tell us to not focus on saving for retirement in order to do it? Unless we're getting the 1-2 punch of financial education and frugality to go along with it, I'm worried that not only are we going to get out of the habit of saving for retirement, but we're not going to learn the skills we need to avoid going into debt in the first place.

Basically, I worry that the money that would have otherwise gone to savings will become part of our consumption income stream.

The younger you are, the more time is on your side. Putting in at least a little bit when you're young will pay off in spades in the future. Yes, debt interest is a nasty NASTY beast, but when the same concept of interest is used to your advantage it can be a wonderful wealth building tool as well.

Has anyone else noticed the banks taking their foot of the gas this year? Or is it just me?


fabulouslyfrugirl said...

Yea, I think you're right about the non-bombardment of RRSP's this year. More of the ads I hear, are "Is RRSP the right thing to do," and almost comparing it as, just because everyone is contributing to RRSP doesn't mean that you have to. (Ummm, since when was everyone contributing?)

Maybe the banks are trying to sell their other services, such as TFSA...?

The Asian Pear said...

I think they're pushing less the RRSP and more the TFSAs but it's still early... I think the major push will begin in March. They always do.

Daisy said...

I've been hearing a lot f it, but then again, I don't have a RSP account, so I guess I'm not listening as I would be if I did :)

Cassie said...

@ Asian Pear - I thought the RRSP cut off was March 1st? Usually they try to push us in February to get our money in the bank.

I honestly feel like some of the TFSA pressure is coming from the government, not just the banks. If they can emphasize the TFSAs and downplay the RRSPs, it shuffles our tax money around so they get more money from us in the present and lower their future tax income instead. That's just my suspicion though.

Money Rabbit said...

Not just you ... I just wrote a post about it myself, as I always thought contributing to an RRSP was the smartest move for retirement, and with the introduction of the TFSA, the RRSP now feels like the disowned child of the money family.

Cassie said...

I read your post as well, and I agree with you. As it stands I feel that funding my RRSP is still more important than funding my TFSA, if only for the immediate tax implications.