TD Survey Finds Half of Canadians Know RRSPs and TFSAs are Critical to their Savings Strategy, But One in Four Don't Understand the Differences

TD Offers Tools, Resources and Advice to Help Canadians Confidently Navigate RRSP Season

TORONTO, Jan. 27, 2020 /CNW/ - A new survey from TD finds that many Canadians surveyed are confused when it comes to the best way to save for the future. While more than half of Canadians surveyed agree that Tax-Free Savings Accounts (TFSAs) (59 per cent) and Registered Retirement Savings Plans (RRSPs) (57 per cent) are a crucial part of their savings strategy, one in four (27 per cent) admit they don't know the differences between the two financial products.

"Regardless of whether you're planning for long-term retirement or for a shorter-term goal, RRSPs and TFSAs are two popular and important options to help grow your savings," says Jenny Diplock, Associate Vice President, Personal Savings and Investing at TD. "Many Canadians have both short-and long-term goals, so a mix of both TFSAs and RRSPs is often a good solution. However, it's important to understand the key differences between the two so you can feel confident about having the right plan in place to help meet your financial needs and goals."

Canadians Surveyed Conflicted on Best Way to Save

When it comes to saving for retirement, RRSPs are often viewed as the better choice (61 per cent of survey respondents, compared to 22 per cent of respondents who feel TFSAs are better). In contrast, TFSAs are the preferred choice for Canadians surveyed saving for a home renovation (51 per cent compared to 13 per cent who prefer RRSPs).

The survey reveals mixed views when it comes to the best way to save for a down payment on a first home. Forty-one per cent of surveyed Canadians believe a TFSA is the best choice, compared to 25 per cent who think an RRSP is the better option. Even experienced homeowners are conflicted, with 15 per cent saying they believe an RRSP is the right option to help save for a down payment on a new home (that isn't their first), despite the associated tax implications.

Canadians surveyed are even more unsure when it comes to the impact the two savings vehicles have on their taxes. Thirty-five per cent of survey respondents say they don't understand the tax implications of a TFSA, and another 30 per cent say the same when it comes to an RRSP. Furthermore, almost one in four (22 per cent) respondents say they would choose a TFSA to help reduce their taxable income for the following year, reaffirming a lack of understanding of how TFSAs work given that TFSAs do not allow you to reduce your taxable income.

"The survey data show that many Canadians do not fully understand key characteristics of a TFSA and an RRSP, such as the tax benefits and withdrawal considerations," says Diplock. "An advisor can help educate on these financial products and work with you to assess your personal situation and find the right solutions for your specific goals and financial needs."

TD Offers Help to Canadians Navigating RRSP Season

Earlier research from the TD Financial Health Index shows that those Canadians surveyed are not confident that they are on track to meet their long-term financial goals, and 62 per cent don't know where or who to turn to for financial advice. To help plan for RRSP season and the upcoming tax deadline, TD encourages customers to come in for an advice conversation and review their savings and investment portfolio. TD also offers a range of in-person and self-serve tools and resources, including a comprehensive Guide to help customers understand the differences and benefits of TFSAs and RRSPs, as well as a limited time offer (launched November 2019) for new and existing customers who open a new RRSP or TFSA account of $1,000 or more by February 9. For information and to find a participating branch, visit www.td.com.

About the Survey
Survey findings are based on an Ipsos poll conducted between December 17 and 19, 2019, on behalf of TD. A representative sample of 1,500 Canadians aged 18 and over were interviewed online. The poll is accurate to within ±2.9 percentage points.

About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the fifth largest bank in North America by branches and serves over 26 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America's Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in TD Ameritrade; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 13 million active online and mobile customers. TD had CDN$1.4 trillion in assets on October 31, 2019. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.

SOURCE TD Bank Group