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RRSPs: Canadians struggling with retirement goals

Nearly two-thirds of Canadians who plan to retire say their RRSPs will be a key source of income for the golden years, even though many struggle to find the dollars to invest.

Some 65 per cent of those who expect to retire say they are concerned about not having enough money to support retirement, with almost half not planning to contribute to their RRSP this tax season, a Scotiabank poll shows.

"There's definitely a big disconnect there and that's worrying," said Bev Moir, senior wealth advisor, retirement planning at ScotiaMcLeod of the reliance on RRSPs but struggles of affordability.

"People need to stop and have a check up and find out if they're on track. Part of that financial check up and financial planning process would be to look at what will be your sources of income during retirement," she said.

With the RRSP contribution deadline just weeks away, many banks and financial institutions have been releasing polls and surveys, with most findings meant to encourage Canadians to sock away a little more money.

The Scotiabank online poll of 1,003 people was conducted between Nov. 28 and Dec. 13.

A good strategy is to set a goal of trying to achieve your maximum contribution levels. That's 18 per cent of earned income, minus any pension contributions, as well as a $5,500 tax-free savings account limit, said Moir.

Amid the struggle to invest, four in ten of Canadians who expect to retire think they will need less than $300,000 for their ideal retirement, said Scotiabank.

Others top sources of retirement income are savings (60 per cent), the government (57 per cent), a work pension (52 per cent) and house sale (22 per cent).

For whatever nest egg you build, a four to six per cent withdrawal rate is a reasonable pace that shouldn't deplete the principal, said Moir.

Savings goal?

But each person's retirement plan is different and therein lies the challenge.

In separate poll findings, only about half of retired Canadians and a quarter of Canadians who are not yet retired have determined the amount of money they will need for a comfortable retirement.

"What it says to me, overall, is not enough people are thinking about this," said Jason Round, head of financial planning support at RBC Financial Planning, noting people especially close to retirement need to focus on how they can set themselves up right for retirement.

As well, the RBC poll showed those who are not yet retired have significantly reduced their retirement savings goal by more than $200,000 to an average of $564,000 in 2012, down from $778,000 in 2011.

With a more stable global economic outlook, it's possible that Canadians are paring back what they think they may need to save.

"Changes in how Canadians define retirement also have an impact - with more expecting to work longer and/or start businesses, their needs for that pool of funds will change," he said.

Other factors that will impact retirement savings include expectations around longevity, health, inflation and how long an individual plans to work, added Round.

The RBC poll was conducted 1,225 people between Oct. 24 and Nov. 27.