In 2020, over 6.2 million Canadians put aside a total of $50.1 billion for their retirement by making contributions to their registered retirement savings plan (RRSP). Compared with a year earlier, contributions increased 13.1% in 2020, while the number of contributors increased 4.9%.
In 2020, the aggregate total income of Canadians grew by 6.0% in constant dollars, because of federal and provincial government transfers and benefits to assist Canadians financially during the COVID-19 pandemic. Canadians reported a similar amount of savings in 2020 as in the previous seven years combined due to higher disposable income and lower consumer spending. According to a report by the Bank of Canada, Canadians had accumulated on average $5,800 in extra savings by the end of 2020. RRSPs are one of the saving vehicles available to Canadians for investing their savings. Other mechanisms such as tax-free savings accounts or non-registered accounts are also available and may appear more flexible in times of uncertainty.
The proportion of tax filers making RRSP contributions reached 22.3% (+0.5 percentage points) in 2020. The increase in the proportion of tax filers making RRSP contributions in 2020 broke a 12-year downward trend, which started in 2008 and coincided with the implementation of the tax-free savings account. It is too early to assess whether this uptick in the contribution rate in 2020 will persist into 2021 or later years.
Meanwhile, the median RRSP contribution in current dollars has trended up since 2008 as contribution limits are raised. The median RRSP contribution reached $3,600 in 2020, the highest level on record and up from $3,260 in 2019.
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