St. Albert and area residents are among the province’s top contributors to registered retirement savings plans.

Statistics Canada data show that St. Albert households contribute an average of $4,278 annually to RRSPs, with a total community contribution reaching nearly $137 million.

Mark Stoneleigh, branch manager at the Tudor Glen ATB Financial, said the average income in the community plays a major role in the above-average contributions.

“The average income in St. Albert is, I think, the second highest in the province,” he said, adding St. Albert trails Fort McMurray. “Our income is higher and RRSPs are a great way to reduce your taxes and save.”

The City of St. Albert’s 2012 community profile lists the median family income at $115,800, with 59 per cent of households bringing in more than $100,000 annually.

The RRSP contribution deadline for the 2012 tax year is March 1, 2013. The maximum amount an individual can contribute without tax implications is detailed on the previous year’s Notice of Assessment, with a cap set at $22,970.

RRSPs “help you fund your retirement. As a society, we can’t keep relying on government to bail us out,” Stoneleigh said. “It’s all part of taking ownership of our own financial health and relying on ourselves opposed to government.”

He said the government recently made changes to the Canada Pension Plan and Old Age Security program that some people rely on to retire, adding even if people receive the maximum amount these benefits offer, it might not support the enjoyable retirement people desire.

Saving in an RRSP offers a tax break the year a contribution is made, but also provides a lower tax rate on funds when they are withdrawn from an RRSP account.

In 2010, Canadians contributed nearly $34 billion to RRSPs, with an average contribution of $2,790 per tax filer. Statistics Canada reports roughly 24 per cent of Canadians contribute to RRSPs, with the median contributor income sitting at $52,970 annually.

Alberta’s average contributor income was 16.5 per cent higher than the national average, at $63,470, and saw an average contribution of $3,290 per tax filer.

The highest reported contributors in the province are from Cochrane, a city roughly 20 kilometres north west of Calgary, with an average household contribution of $6,311. This was followed by Fort McMurray with $6,121, Beaumont with $6,087 and Sherwood Park with $5,443.

Morinville households contributed an average of $2,886 annually, beating out the greater Edmonton area average of $2,650.

“It is highly recommended that you invest as much as you can,” Stoneleigh said, adding a typical target is to invest 10 per cent of income.

Individuals must be at least 18 years old to open an RRSP and he said it is a good idea to start investing as early as possible.

“The sooner you start, at the end, the more money you will make because of compounding interest,” he said. “The longer term you have, the more you’ll have in your RRSP for retirement.”

Investment options

RRSPs offer the best long-term savings option for a majority of individuals planning for retirement.

Stoneleigh said they could also benefit first-time homebuyers who are permitted to withdraw up to $25,000 tax free when the money is put toward the purchase of their first home.

For individuals in the lowest tax bracket or who anticipate being in a higher tax bracket upon retirement, he said tax-free savings accounts (TFSA) provide another savings option.

TFSAs were introduced in 2009 and previously allowed individuals to invest $5,000 annually, which has recently increased to $5,500. When individuals withdraw these funds, they will not be taxed.

Paying down debt is a priority for many Canadians, though Stoneleigh said this should most often be coupled with a savings plan.

He said individuals with a high balance on high-interest credit cards should work to pay down that debt initially, before investing in an RRSP or TFSA.

Individuals with debt like a mortgage or car payment, however, should pay down debt in addition to saving for retirement.

“If you wait until that mortgage is paid off, you’re now a lot older and … you’ve got a much shorter time frame and your money won’t grow as much as it would have,” he said.

He said it is important for people to know how to reach their retirement goals in order to live the retirement they desire.

“The best advice I can give to anybody is they should meet with a financial advisor. Look at your goals have a plan,” he said. “A lot of people know what they want but they don’t know how to get there.”

Greater Edmonton area RRSP contributions

City Average household contribution Community contribution

Edmonton $2,971 $792,133,000

St. Albert $4,278 $136,989,000

Beaumont $6,067 $21,832,000

Leduc $2,317 $34,020,000

Morinville $2,886 $35,933,000

Sherwood Park $5,443 $139,006,000

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