While many people contribute to their registered retirement savings account (RRSP) every year, even more don’t. A recent RBC poll found that 43 per cent of Canadians aged 18 to 34 now hold an RRSP. That’s good news -- the number is up from 39 per cent in 2011 -- but more than half of young Canadians are still without a dedicated retirement savings account.

If you’re one of those folks who haven’t opened one, we’re here to help. Here are five things you need to know about starting an RRSP savings account.

1. You can start an RRSP online

Opening an RRSP has never been easier. Go to your bank’s online brokerage site, such as TD Waterhouse or Scotia iTrade, and simply follow the instructions on how to start an account. You’ll need to fill in some personal informatio y n and there could be a processing delay of a day or two before the account is officially opened, but before long you’ll be part of the 43 per cent. You can go into a branch to open an RRSP, too.

2. You need to set retirement goals

To make your RRSP really work, you need to have some sort of idea as to where you want to be in retirement. Do you want to take vacations every month? Will you be happy relaxing at your cottage? Of course, priorities change, but having some idea as to how much money you think you might need in retirement helps you decide what investments to buy.

3. You should know how much risk you're comfortable with

Once the RRSP is open, you’ll need to put something in it. But what? You can choose bonds, stocks, mutual funds, ETFs and other types of securities. Some options are riskier than others -- smaller companies are more volatile than larger ones, for instance.

Before you buy, you’ll need to determine how much volatility you can stomach. Will it bother you if your retirement savings fall by 10 per cent in a year? If yes, then maybe stick to more conservative investments.

4. You need to come up with a contribution plan

Opening the RRSP isn’t enough. You also need to put money in -- and, for your savings account to accumulate money, you need to invest regularly. Some people set up monthly automatic withdrawals from their savings account so there’s a constant stream of cash going into the account throughout the year. Others pay a lump sum at the beginning or end of the year. Decide which option is best for you and stick to it.

5. It's best not to withdraw from your RRSP 

This might seem obvious, but it’s worth reminding newbie RRSP investors that once money goes in it doesn’t come out. In theory you can pull the money out, but you’ll have to pay tax on it at your income tax rate. The whole idea is to contribute when you’re in a high tax bracket and take the money out when you’re in a lower tax bracket, in retirement. If you withdraw when you’re making lots of dough, you’ll end up with a large tax bill.

Setting up an RRSP isn’t complicated and if you can stick to a plan and keep the money in the account it’s easy to build a nice nest egg. Of course, this whole article is moot if you don’t have an RRSP. So, the sooner you open one the better.

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