Statistics show that Canadians, as a whole, consistently fall well short of the total amount they are allowed to invest in their registered retirement savings plans.

This past year was no exception. According to Statistics Canada, although nearly 86 per cent of tax filers were eligible to contribute to an RRSP during the 2005 taxation year, only 31 per cent did so. And the $30.6-billion they contributed, though up 6.2 per cent from 2004, represented only about 7 per cent of the total room available - leaving more than $400-billion in untapped eligible contribution room since 1991.

"This is a concern because we've got a big group of people who are obviously approaching retirement, and the sooner [they] start preparing the better," said Debbie Ammeter, vice-president of advanced financial planning for Investors Group Financial Services Inc. in Winnipeg.

An RRSP is an excellent way for people to plan their retirement savings on a tax-deferred basis, "so it does cause me concern and maybe even a bit of puzzlement" to see this lack of preparedness, she added. Experts cite several reasons for why so many Canadians are not adequately preparing themselves for retirement. "I think most people don't start to seriously think about it till around age 45 to 50," which is typically 10 to 15 years before their anticipated retirement date, said Jack Lumsden, a senior financial adviser with Assante Financial Management Ltd. in Burlington, Ont.

That's when they start to think about whether they have enough assets and income to generate the lifestyle they want in retirement. But, he said, they should be starting to think and plan a lot earlier - about 25 years ahead of the expected retirement date, in fact.

The problem isn't just that people don't take full advantage of their RRSPs; often investors do establish retirement plans, but then make strategic or short-sighted planning errors. Such errors include, for example, contributing substantially less than what might otherwise be possible, thus missing out on several years of tax-deferred, compound growth.

Another error involves putting last-minute RRSP money into something like a money market fund or cash account, "and then forgetting to move it into an investment that's more appropriate" for maximum long-term growth, said Ms. Ammeter.

"There is probably a lot of money that people have parked into RRSPs thinking 'I'll get back to it and make an investment decision later' and then they forget about it or don't get around to it," she added.

Another potential problem is short-sightedness; some investors have a tendency to "chase the hot investment" because "they want to invest in whatever has done well recently," noted Mr. Lumsden, who draws an analogy to checking in the rear-view mirror instead of looking ahead to make investing choices.

Investors who delay retirement planning because they think they will continue working into old age (as many baby boomers appear to believe they will, perhaps by easing into retirement by working part-time) need to consider the possibility that their plans won't work out, Ms. Ammeter stresses.

"It may be reassuring for people to say, 'Maybe I'll just work longer.' That certainly is a great strategy for boosting your retirement resources, but you still have to give some planning as to what would happen if you couldn't," she said. "Sometimes those 'working longer' plans don't always work out for health or personal reasons." Experts suggest that RRSP investors adopt good investment habits that allow them to start planning for their retirement at a relatively early stage of life.

One such strategy, noted Mr. Lumsden, involves dollar-cost averaging, whereby you contribute on a monthly basis to continually purchase more of something like a good diversified mutual fund at varying prices - hedging your risk by taking advantage of opportunities to acquire more of that instrument when prices drop, and less when prices increase.

Another course of action includes taking full advantage of group company savings plans that have matching options. If you haven't done so already, it may also be advisable for you to make an inventory all of your existing RRSPs and consolidate them in one spot, perhaps under the auspices of a professional investment adviser. This, too, can help create and maintain a properly diversified portfolio.

When older Canadians do finally realize they have not saved enough, or not taken retirement planning seriously, panic often sets in because they consider it "almost too daunting a task" to catch up, noted Ms. Ammeter. But there are options for people in that situation, too, say financial planning experts.

An older investor could, for example, take a more aggressive stance in his portfolio than might otherwise be the case, following the general guideline to reduce the percentage of potentially riskier investments, such as equities, as the investor ages. More risk might equal a greater return in some circumstances.

"We are living a lot longer and a person who retires at 60 could well be facing 30 years of retirement nowadays, so you may need more equity than that rule of thumb might indicate, because your money has to last you for a long time," said Ms. Ammeter.

A catch-up payment, to take advantage of RRSP contribution room that has been accumulating for several years, might also be a realistic possibility, suggests Robert Snowdon, a chartered accountant in Kanata, Ont. He noted that an older couple might have reached the stage where their children are through university and the house is paid off, thus freeing a large chunk of cash they can contribute to retirement planning. An RRSP loan might also be an option to top-up your plan, because the contribution itself will reduce taxes and may even generate a tax refund which can, in turn, be used to pay down the loan.

As for the overall national RRSP statistics, Mr. Snowdon suggests they may not take into account the fact that some people have other sources of income for retirement, and may therefore be financially secure without needing to use their full allotment on an annual basis.

Moreover, he and other experts agree it is impossible to give, with any degree of certainty, a ballpark figure as to how much an individual investor will need to accumulate in his RRSP. There are, experts argue, too many variables that need to be applied to individual circumstances, such as alternative income sources, health, lifestyle in retirement, and expected life span, before it can be determined whether any set amount is adequate. For people with very low incomes, however, it can be exceedingly difficult to try to save within an RRSP, let alone take advantage of the available contribution of 18 per cent of their previous year's earnings, because "they're struggling with mortgages, putting kids through school, and car loans, et cetera," said Larry Hemeryck, a certified general accountant based in Simcoe, Ont.

People in this position might be better off depending on government pension money, including the guaranteed income supplement when they ultimately retire, he said.

Special to The Globe and Mail