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HST hitting wallets more than expected: RBC poll

TORONTO/VANCOUVER, September 23, 2010 — More than half (54 per cent) of retirees and pre-retirees in B.C. and Ontario say the recently introduced Harmonized Sales Tax (HST) has impacted their personal expenses more than they expected, according to the RBC HST Poll released today.

"Whether retired or not, life can be unpredictable at times and the HST is a good example of an uncontrollable change that can impact your current finances and retirement," said Lee Anne Davies, head, Retirement Strategies, RBC. "A big part of being ready for the unexpected is having a financial plan and this is where a financial advisor can help you consider your options and plan a course of action when a change does occur."

Of those with a financial plan, more than 40 per cent say the HST is having the biggest impact on their plan this year (B.C.: 44 per cent of retirees and 52 per cent of pre-retirees; Ontario: 44 per cent of retirees and 46 per cent of pre-retirees). Furthermore, approximately seven-in-ten are confident that their financial plan can accommodate uncontrollable circumstances such as a change in tax.

The survey found the top courses of action to reduce the impact of HST have been to reduce (55 per cent) or postpone spending (45 per cent). Over the next six months, more than eight-in-ten respondents say they are likely to postpone or reduce spending to combat the effect of the HST. Pre-retirees in both provinces said looking for other sources of income (B.C. 45 per cent and Ontario 51 per cent) is a way they plan to combat the effects of the HST, an option not necessarily available to retirees. Half of pre-retirees (49 per cent) in both provinces say they are likely to delay retirement as a result of the HST.

"It's important to know your options and be realistic about your plan when adjusting to a life change that impacts your finances and retirement," said Davies. "Planning and budgeting are essential steps towards reaching any financial goal and online tools such as RBC's myFinance Tracker can help track and manage where you're spending money."

Provincial Highlights

British Columbia

  • B.C. respondents have been much more active in joining the efforts to stop the HST (36 per cent) compared to Ontarians (15 per cent).
  • Pre-retirees are more likely than retirees to expect their spending will decrease on treating themselves (46 per cent vs. 36 per cent) and treating their families (41 per cent vs. 30 per cent).
  • Pre-retirees are most likely to say they'll figure out the impact of the HST along the way (42 per cent).
  • About seven-in-ten B.C. respondents are aware of the government's HST rebate to businesses however; less than five per cent have noticed price reductions

Ontario

  • More pre-retirees than retirees expect a decline in spending on supporting their families (24 per cent vs. 16 per cent) and healthcare (14 per cent vs. five per cent).
  • Pre-retirees (36 per cent) have been more likely than retirees (27 per cent) to alter their budgets.
  • Over the next six months, pre-retirees are more likely to alter their budgets (75 per cent), postpone spending on necessities (73 per cent), re-examine their long term financial plan (70 per cent) or create a plan to minimize the impact of HST (58 per cent).

About the RBC HST Poll
The RBC HST Study was conducted by Ipsos Reid between July 28 and August 5, 2010. This online survey of 1,128 residents, aged 50 and over, of Ontario and British Columbia was conducted via the Ipsos I-Say Online Panel, Ipsos Reid's national online panel. The results are based on an unweighted probability sample of this size, with 100 per cent response rate. With a representative sample of this size, the results are considered accurate to within ±2.8 percentage points, 19 times out of 20. Margins of error for subgroups will be larger.

Your Future By Design® is RBC's distinctive approach to help clients identify, plan, and realize their goals for retirement. With the guidance of RBC financial planners and investment and retirement planners, Your Future By Design helps clients create a blueprint for a successful lifestyle and financial plan for retirement based on what is truly important to them in key areas in life, including family, health, home, lifestyle, work/business, mind and spirit, and legacy. To find out more about how RBC can help build a blueprint for the future, visit www.rbc.com/yourfuture or call 1-866-335-4055.

To learn more about myFinance Tracker, visit www.rbcroyalbank.com/myfinancetracker.

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Media contacts:
Suzanne Willers, RBC, (416) 974-2727
Seema Sharma, RBC, (416) 974-5606