What Should You Do With Your Tax Refund? + MORE Mar 5th

MONTREAL – Two-thirds of Canadians polled would like to have put more money into their RRSPs for the 2013 tax year, according to a new survey that found average contributions were down slightly this time around.
The Bank of Montreal’s (TSX:BMO) RRSP deadline survey, conducted last week, said that Canadians were contributing an average of $3,518 to their RRSPs, down $26 from an average of $3,544 for the 2012 tax year.
“It looks like from one year to the next, we’re consistent,” said Chris Buttigieg, senior manager of wealth planning strategy at BMO Financial Group.
“If it was down $1,000, I’d be concerned,” Buttigieg said from Toronto.
Buttigieg noted that Canadians are also juggling other priorities such as mortgages, car payments and month-to-month living expenses.
Meanwhile, more than two-thirds of Canadians were making contributions to their Registered Retirement Savings Plan before the deadline, which expired at midnight Monday night, up from the year-earlier’s 63 per cent…

Many buyers decided that the largest-possible house was a better idea than a retirement fund or a child’s education.

Best Actress winner Helen Hunt and Best Actor winner Jack Nicholson of “As Good As It Gets” on March 23, 1998 at the 70th Annual Academy Awards at the Shrine Auditorium in Los Angeles. (HECTOR MATA/AFP/Getty Images)
Which past Oscar-nominated movie title best describes your retirement readiness? Investment dealer Edward Jones and Leger Marketing put the question to Canadians and found that while the majority are actively saving for retirement, only 30% will be able to retire comfortably. Take a look how Canadians responded:
Million Dollar Baby - I’m set for retirement - 8%
Bound for Glory – I’m on my way to retiring comfortably - 22%
As Good as It Gets – I’m saving as much as I can, but it will not be enough to retire - 33%
Gone with the Wind – I’m not saving for retirement - 20%
(The remaining 17% said they did not know which movie title best described their retirement savings.)
“With various expenditures vying for our attention, it can be challenging to factor in retirement savings…

Do you remember the good old days when spending our tax refund frivolously wasn’t such a big deal? Our jobs were stable, house values seemed to be on a never-ending climb and the stock market was booming. Well, we are all feeling a little less certain about our financial stability these days; our portfolios have been beaten up, the wealth in our homes have taken a blow and on top of all that, we are worried about our jobs. There is a lot of insecurity and fear out there and spending our tax refund on a great vacation or a new flat screen TV may not be the best choice.
What To Do With Your Tax Fund: Spend, Save, or Splurge?
It is a good idea to give some thought to your overall financial health, with the first and most obvious area being your emergency reserves. Laura is a 42-year-old marketing executive with a small independent firm who is expecting to receive a $10,000 income tax refund. In past years, Laura just reinvested her refund into her RRSP but this year things have changed…

(Image courtesy of Ambro / FreeDigitalPhotos.net)
While taxes don’t have to be filed until April 30, I always like to do a preliminary run through with TurboTax (formerly QuickTax) before the end of February. When I did this a few days ago, I was glad I did because I discovered I had a bit more RRSP contribution room than I’d guesstimated, and I still had time to act before Monday’s March 3 RRSP deadline.
In my case, I contribute regularly through a group RRSP at work, so I don’t normally regard the looming RRSP deadline with any trepidation. But if you’re in employer sponsored pensions, the pension adjustment (PA) may vary up and down. You really don’t know the precise RRSP room until you get your Notice of Assessment after filing the prior year’s taxes.
Don’t file your taxes until second week of April
By now, you should have received your T4 slips and most RRSP receipts, which is sufficient for the purpose of a preliminary run through. The online edition of TurboTax makes it easy to carry forward your information from the prior year, including RRSP contributions and unused room from prior years…