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BMO Bank of Montreal

February 29, 2012 09:00 ET

BMO's Financial Tip of the Week: Avoid Last Minute Contributions to Your RRSP

TORONTO, ONTARIO--(Marketwire - Feb. 29, 2012) - As part of BMO Financial Group's ongoing commitment to financial literacy and 'Making Money Make Sense' for Canadians, BMO is releasing a financial tip every week in 2012. In addition, BMO provided daily retirement tips during the month of February.

Today is the last day for Canadians to make a contribution towards their Registered Retirement Savings Plan (RRSP) before the 11:59 PM deadline. For those who have waited until the eleventh hour to make their annual contribution, BMO offers some tips and tools on how keep ahead and on top of your RRSP contribution throughout the year.

BMO's Financial Tip of the Week: Avoid last minute scrambles to contribute to your RRSP

Make it automatic

Set up automated monthly contribution/deposit plan and, if possible, arrange with your employer to have a portion of your paycheque sent directly to your retirement savings plan. With a set-it-and-forget-it plan you will be contributing throughout the year, and avoiding the last minute scramble for cash. With the average age of retirement around 60 years old, Canadians could save more than $120,000 by simply contributing $100 per month.

Forgo your daily splurge

Think about all purchases you make on a daily basis - a coffee on the way into work, lunch from the bistro next door, etc. Ever wonder how much money you could save if you did not treat yourself every day? If you forgo a daily $3.00 coffee, that could leave you with $1,095 a year for your RRSP. This amount alone, compounded over time, could equal almost a year's worth of retirement income.

Mortgage Free? Put the payments into an RRSP

If you happen to find yourself in the fortunate position of having already paid off your mortgage, consider allocating the monthly payment (or a portion thereof) towards an RRSP.

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