Income Planning Trends

Dipping Into The Kitty

One Third of Canadians Have Withdrawn Funds From Their RRSPs Before Retirement

Our continuing series, North of the Border, looks at the savings trends, spending habits and financial preferences that Canadians bring to the process of saving for retirement.

TORONTO, ONTARIO–(Marketwired – Feb. 26, 2016) – BMO Financial Group today released a study which found that 34 per cent of Canadians have withdrawn money from their Registered Retirement Savings Plans (RRSP) before retirement.

The study examined the reasons behind Canadians’ decision to make these withdrawals and their concerns about the consequences.

According to the study, on average, Canadians have withdrawn $15,908 from their RRSPs.

One third have paid back the money but 25 per cent expect they will never pay it back.

The top reasons for making RRSP withdrawals, include:

  • To buy a home (25 per cent)
  • To pay off debt (21 per cent)
  • To help pay living expenses (21 per cent)
  • To cover costs after an emergency, such as a car accident or house flood (15 per cent)

“Although it’s not advisable to make withdrawals from an RRSP, it’s clear that some Canadians have had to do so in order to meet short-term needs,” said Chris Buttigieg, Senior Manager, Wealth Planning Strategy, BMO Wealth Management. “There are tax consequences associated with making early withdrawals from your RRSPs, so it’s a good idea to speak with a financial professional to see if you have any other options before doing so.”

“Making an RRSP withdrawal to free up funds should only be considered as a last resort. To meet unexpected future needs, consider building up a contingency fund in a short-term savings vehicle such as a TFSA or savings account instead of dipping into your RRSP,” Mr. Buttigieg added. “It’s best to only make premature RRSP withdrawals for the purpose of buying a new home or paying for continuing education, as these withdrawals may qualify for the Home Buyers Plan or the Life Long Learning Plan, respectively.”

According to the study, on average, Canadians have withdrawn $15,908 from their RRSPs. One third have paid back the money but 25 per cent expect they will never pay it back.

Withdrawing With Reason

The study also found that, of those Canadians who have made an RRSP withdrawal, the majority (84 per cent) said they only did so as a last resort. Three quarters said they were very concerned about the potential consequences of this decision, including:

  • Loss of retirement income (79 per cent)
  • Withholding tax on the cash at the time of withdrawal (77 per cent)
  • Not being able to save effectively for retirement (77 per cent)
  • Loss of contribution room in the future (62 per cent)

“If you’ve withdrawn from your RRSP early, a financial professional can help you assess the impact on your retirement savings and get your plans for your golden years back on track,” said Mr. Buttigieg.


Regional Breakdown

Region% who withdrew 

Average amount



% who have paid back





National34$15,90833To buy a home
Atlantic40$8,50934To help pay living expenses
Quebec30$12,62242To buy a home
Ontario35$17,09230To help pay living expenses
Alberta32$16,53835To buy a home
B.C.33$24,10028To buy a home


The BMO RRSP Survey was conducted by Pollara between December 30, 2015, and January 4, 2016, with an online sample of 2,177 adult Canadians. Data have been weighted using the latest census data to be representative in terms of age, gender and region. The margin of error for a probability sample size of 1,500 is ± 2.5% and for a sample size of 2,177 is ± 2.1%, 19 times out of 20.

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About BMO Financial Group
Established in 1817, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of $699 billion as of January 31, 2016, and close to 47,000 employees, BMO provides a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.