Everyone stresses the importance of saving money for retirement, emergencies, buying a home, or other significant expenses. People can tell you what to save for, but between all of these, no one really has an answer to how much. Canadian residents have incomes, lifestyles, and expenses all over the spectrum, so it’s difficult to tell if you’re in good financial standing compared to everyone else.
Something critical to note, though: it’s important not to compare your financial situation to others. No two savings accounts are exactly alike. However, it’s good to know the average savings by age in Canada to gauge your spending habits, the debt you have left to pay off, and if you’re on track to retire when you want to.
So, what is the average savings by age in Canada, and if you’re not close to the threshold you want to be at, how can you save more?
Average Savings by Age in Canada
Statistics Canada released a Survey of Financial Security in 2020 conducted across major cities in the country. It collected data regarding individuals’ and economic families’ (two more people living together who are related by blood or legal means) assets and debt. The results were as follows for different economic families and age groups:
- Under 35 years old: $133,400
- 35-44 years old: $272,100
- 45-54 years old: $564,600
- 55-64 years old: $809,100
- 65 years old and up: $739,200
Now, the average savings by age in Canada for individuals are:
- Under 35 years old: $58,900
- 35-44 years old: $125,900
- 45-54 years old: $350,500
- 55-64 years old: $446,500
- 65 years old and up: $384,100
These figures represent Canadian’s average overall savings. The survey also gathered data about participants’ retirement savings, TFSA, RRSP/RRIF/LIRA, and Non-RRSP or pension savings.
Don’t worry if your overall savings don’t perfectly line up with the statistics outlined above. These averages incorporate the highest and lowest earners surveyed, affecting results. People also have different expenses depending on where they live; it’s understandable if someone living in Vancouver has fewer savings due to its higher cost of living than someone residing in a more affordable city.
Median Net Worth by Age in Canada
Besides wanting to know the average savings by age in Canada, you may also have questions about the average person’s overall net worth. You can calculate your net worth by subtracting your liabilities (e.g., a mortgage or vehicle loan) from your assets (e.g., your home or car’s value). Your net worth differs from your savings because, as you can see from its definition, it includes illiquid assets.
Statistics Canada reported the median (note: not average) net worth of individual Canadians in 2019 was as follows:
- Under 35 years old: $48,000
- 35-44 years old: $234,400
- 45-54 years old: $521,400
- 55-64 years old: $690,000
- 65 years old and up: $543,200
Your net worth can fluctuate daily due to factors like the property market, your investment portfolio worth, the new debt you take on, or old debt you pay off. Again, location matters too — the median net worth of individuals living in British Columbia in 2019 was $423,700, while it was $211,400 for residents of Prince Edward Island.
How Much is Enough to Retire On?
Besides saving to buy big purchases, arguably the most important thing you’ll ever save for is retirement. You want to be able to afford to stop working one day, so how much do you need to be stowed away to live on and maintain your lifestyle?
A general rule of thumb is that you should save around ten times your yearly income by the time you reach retirement age. So, if you make $50,000 a year and retire between the ages of 65 and 67 (assuming you never get a raise or make a career switch that pays more, which is unlikely), you’ll want at least $500,000. Not everyone follows or can follow this rule, but it’s a good starting point (If you want to know more about how much you should save by age for retirement, in particular, check out this blog post on the subject).
Let’s move on to the next question: can you retire at 60 with $500K in Canada? It depends on your lifestyle and anticipated expenses. This case study from Cashflows & Portfolios follows an individual with $500K in his RRSP and decides yes, it’s enough to retire on. However, all situations are different, and that amount might not fit your needs.
Tips to Reach Your Savings Goals
Now you know what the numbers are. If your overall savings don’t align with the above averages, what can you do to get back on track? You can’t save your way to making more money, but there are a few things you can do to change your spending habits and eliminate debt as soon as possible.
First, set goals that account for retirement and major purchases. For the former, Fidelity Investments suggests having the equivalent of your yearly income in your savings by the time you’re 30, twice your income by 35, three times by 40, and so on at five-year increments until you have eight times by 60, and ten times by 67.
These figures assume you save at least 15% of your earnings from the time you turn 25, so if you haven’t started saving yet, now is an excellent time to start (and put even more away if you can to catch up and take advantage of employer matches). Fidelity Investments also made its calculations assuming you invest more in stocks than bonds.
Need Help Securing Your Financial Future?
If you can’t save 15% of your income and your debt feels insurmountable, Marble can help you improve your financial situation and reach your savings goals with a personalized debt relief plan. Using advanced AI and credit simulators, Marble analyzes your income, expenses, spending habits, and other factors to create feasible steps to follow that help you pay off your debts faster so you can save more. It also provides financial literacy materials to teach you how to budget effectively.
You may already align with the average savings by age in Canada, but if not, start improving your financial health with Marble, today.
