Determined to qualify as a teacher as quickly as possible, she enrolled in a certification program at a college in Buffalo, N.Y., a manageable commute from her home.

But to cover her tuition fees -- the equivalent of about $17,000 (Canadian) -- she was forced to turn to her retirement savings.

"I had to use the RRSPs because they were the only way I had to pay for it," says the woman, who, involved in hostile divorce proceedings, didn't want her name used.

Although the federal government's Lifelong Learning Plan (LLP) allows people to cash in RRSPs without tax consequences to help pay tuition costs, her situation is one of the few when doing so actually makes sense, financial planners say.

"The life-time learning plan is, I think, of limited use and not generally an attractive option" except in special circumstances, such as those faced by people whose jobs disappear and they are forced to go back to school to retrain, says Michel Guertin, vice-president of Donro Financial in St. Catharines. "It's really limited to specific cases."

Most people who have been employed and opt voluntarily to go back to school to retrain have some savings to draw on outside an RRSP and that's what they should use first, says Mr. Guertin. "It's a different story for someone who has been laid off and is saying 'okay, this is a good opportunity now to change careers' and a way to fund that is to use some RRSPs."

Planners say the economic slump has happened too recently to tell if layoffs are prompting more people to use their RRSPs to finance a career change.

While figures for last year are not yet available, CCRA spokesman Michel Proulx says 8,500 Canadians cashed in RRSPs in 2000 to finance education programs, compared to 7,500 in 1999.

When it comes to buying homes, 118,418 people used RRSPs during the first three quarters of 2001 (final-quarter figures have not yet been tallied). For all of 2000, that figure was 137,644, and 138,215 in 1999.

The LLP allows for a $20,000 total withdrawal over four years to help pay for enrolment in a full-time post-secondary education course that lasts longer than three months. The most a person can withdraw in any one year is $10,000. The student then has up to 10 years to pay the money back, with repayments starting five years after the money is removed.

The parallel Home Buyers' Plan (HBP) helps first-time home buyers come up with the downpayment on a home by allowing them, too, to withdraw up to $20,000 without tax consequences from an RRSP. The buyer's spouse can also withdraw $20,000, for a total of $40,000.

The money must be repaid in annual instalments over a 15-year period, starting in the second year after the withdrawal.

Financial adviser Todd Peters recently used $20,000 from his RRSP to put a downpayment on an 80-year-old renovated farmhouse in Winnipeg's River Heights neighbourhood.

"As long as you are in the mode of making monthly savings payments [into an RRSP] to begin with, then using the Home Buyers' Plan makes perfect sense," says the 23-year-old adviser with the Investment Planning Counsel of Canada. "It's a great way to get a lot more capital toward purchasing a home."

Having a larger downpayment often enables a buyer to get a preferred mortgage rate and may eliminate the expensive need to have the mortgage insured through the Canada Mortgage and Housing Corp., which can cost up to 3 per cent yearly on the insured amount.

"If you can take some money out of your RRSP, it usually will save you a couple of grand in fees and other things in your mortgage," Mr. Peters says.

"And because you're paying back a loan to yourself that has no interest attached to it and there's no tax consequences as long as you make the minimum payments every year, it's a good deal all around."

But there are pitfalls to both plans. One of the biggest is the risk of not making the minimum repayments, which means the funds will be counted as income earned and you'll have to pay tax on it.

Unless you're enrolled in an education program where you're virtually guaranteed a job when you graduate, this is a particular concern for people using RRSP money to cover tuition, pros say.

Planners feel the risks of defaulting are lower for those who use retirement savings to buy a home.

"With the Home Buyers' Plan, you're presumably making an income [to qualify for a mortgage to purchase a home], so you'll likely be in a position to make the payments," Mr. Guertin says.

"And homes are an investment," which may appreciate over the long term and help offset one of the other drawbacks of cashing in an RRSP -- the fact that you lose out on tax-sheltered growth of your money.

That's the biggest marks against withdrawing from an RRSP, Mr. Guertin says. "You've lost that growth for the period you have that money out. The other downside is obviously you aren't contributing to your plan during that period either. Those are the two big negatives when you look at the reasons why you contribute to an RRSP in the first place -- to help you reach your retirement goals."

The way to ensure repayments are made is to continue making regular monthly RRSP contributions but designate some of it towards payback, Mr. Peters says.

"I don't let my clients use the HBP unless they immediately set up an automatic savings plan to start repaying the RRSP." That way, $100, for instance, is automatically put into a RRSP each month for repayment and the home buyer comes to think of that money as part of the financing cost, he says.

"If they're paying $600 a month in mortgage payments, then they're paying $700 a month really in financing costs, with that extra $100 going back to them," he says.

"It also makes sense as a way of getting back into the market because of dollar-cost averaging, rather then making a lump sum payment" once a year, he adds.

Cashing in an RRSP isn't wise for anyone who might have difficulty making the required repayments, Mr. Peters says.

"What if something happened in your household between now and the end of the year and you can't come up with that $1,000 to repay? Or, if you and your spouse both borrowed the maximum amount, you have to pay back $2,600 a year. If you are a cash-strapped couple, coming up with $2,600 is tough."

The St. Catharines woman admits she's concerned about the repayment issue because she isn't yet working as a teacher. Still, it was an opportunity she couldn't pass up.

"It does worry me," she says, "but I didn't really have any other way to do it."