Why don't most people save as much as they should? Canadians can contribute up to 18% of their income to their RRSP in exchange for a generous income tax deduction--essentially, free money. Yet most fail to take advantage: In 2003 the median RRSP contributor earned $43,000 but their median RRSP contribution was just $2600, which is only 6%. Overall, only 34% of those eligible to contribute to an RRSP actually did so. When RRSP room left over from previous years is included the result is dismal: Canadians used up barely 9% of the available RRSP contribution room, leaving 91% of it unused. These numbers are astounding--Canadians left an enormous amount of free money on the table! In this article I'll explain the psychology behind why most fail to max out their RRSP contributions, and what you can do to make sure that you do contribute enough to your RRSP.
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Source: Efficient Market Canada