Lower-income Canadian households save just $852 per year, according to the latest data from StatCan.
In contrast, the highest-earning Canadians were able to save over $41,000. It makes sense that high-income earners save more while low-income earners save less.
What about the average savings by age in Canada, though? Just how much does the average Canadian have saved up?
Below, I’ll answer all of these questions and more, so you can see how you stack up compared to other Canadians.
Average Savings By Age In Canada: What The Data Shows
To provide you with some context, here’s some of the latest data from Statistics Canada. Note that this is the household family average, which accounts for single-person households and economic families.
For reference, an economic family is defined by Statistics Canada as:
“A group of two or more people who live in the same dwelling and are related to each other by blood, marriage, common-law union, adoption, or a foster relationship.”
|Age Group||Private Pension Assets||Financial Assets||Total Average Savings|
|35 to 44||$192,600||$47,900||$240,500|
|45 to 54||$406,700||$110,000||$516,700|
|55 to 64||$567,500||$130,800||$698,300|
|65 and Older||$405,600||$166,800||$572,400|
- Source: Statistics Canada
The metrics I’ve used to calculate this include private pension assets and financial assets (bank accounts, investments, etc.) Government retirement plans such as the Canada Pension Plan (CPP) are also not included.
I also haven’t included non-financial assets such as vehicles, property, or businesses. While these non-financial assets could technically be sold for cash if the need arises, they don’t qualify as financial savings in and of themselves.
As you might expect, the older you get, the more savings you’ll have. The value of financial assets typically increases at a steady pace as taxpayers purchase more expensive vehicles, homes, and other financial assets.
Looking at the table above, you also may be wondering, “Why do Canadians 65 and older have fewer retirement savings than the 55 to 64 age group?”
It is likely because age 65 is the standard retirement age. While some choose to continue working into their late 60s and early 70s, the average Canadian retires at 65 and begins to tap into their retirement savings account, which can reduce the overall balance of retirement savings.
There’s not exactly a set amount that you should have saved by a certain age in Canada. How much you should have saved depends on your current earnings, your annual living expenses, and the type of lifestyle that you want to live after retirement.
Somebody who plans on living a minimalist lifestyle after retirement won’t need as much as an individual who wants to drive a Mercedes, take monthly vacations, and maintain a membership at a golf club.
That being said, Fidelity mentions a great guideline to saving in Canada – by age 30, you should have at least one year’s worth of your current salary saved.
For example, if you earn $65,000 per year and just turned 30, then your total savings should be at least $65,000 spread across your financial assets and retirement savings.
Here is a full chart detailing Fidelity’s recommended savings by age for Canadians:
|Age Of Canadian Taxpayer||How Much They Should Have Saved|
|30||1 year’s salary|
|35||2 years’ salary|
|40||3 years’ salary|
|45||4 years’ salary|
|50||6 years’ salary|
|55||7 years’ salary|
|60||8 years’ salary|
|67||10 years’ salary|
According to the latest data from Statistics Canada, the average yearly savings for Canadians in 2021 was $9,972. This accounts for both low, middle, and high-income earners.
Now, let’s break this down into an easy-to-understand percentage to show the percentage of their total income that Canadians save.
In 2019, the average Canadian saved just 2.07% of their total net income. However, the following years after the pandemic saw a massive increase in Canadians’ average savings rate. In 2020, the savings rate increased exponentially to 14.09% and 27.02% towards the final quarter of 2020.
So, how did Canadians manage to save more during the midst of a global pandemic?
It turns out that all of the lockdowns and social distancing regulations discouraged shopping and spending. Retail shopping centres and malls were ghost towns, and even grocery stores saw fewer customers. Instead of spending, the majority of Canadians were saving.
This data should really make you stop and consider what you’re spending your money on and think about just how much you could save if you lived frugally for a year or two.
Median Savings By Age In Canada: What The Data Shows
Now that you’ve had a chance to see the average savings by age in Canada let’s take a closer look at the median savings by age in Canada, according to Statistics Canada.
Medians often tell a different story than averages, and the median Canadian’s savings are significantly lower than the average. Note that this is the household family median, which includes both single-person households.
|Age Group||Private Pension Assets||Financial Assets||Total Median Savings|
|35 to 44||$90,000||$11,100||$101,100|
|45 to 54||$231,600||$14,000||$245,600|
|55 to 64||$354,500||$20,300||$374,800|
|65 and Older||$237,000||$30,000||$267,000|
- Source: Statistics Canada
Median and average numbers tend to be quite different from each other. But which numbers are more accurate?
Although all of the numbers are technically accurate, I would argue that the median savings by age paint a more realistic picture of what to expect for yourself.
Averages can be greatly skewed by outliers, such as Canada’s many billionaires.
As the gap between Canada’s top 1% and the rest of the population continues to increase, the average savings numbers will be heavily skewed towards the highest earners (who are also the biggest savers).
Median numbers, on the other hand, point directly to the middle. Currently, 58% of Canadians are classified as “middle class” according to the Organization for Economic Cooperation and Development (OECD).
This makes the middle class the largest financial group in the country, which is why the median savings by age is likely a more accurate representation of Canadians’ savings and finances.
Key Insights About Savings In Canada
The interesting thing about numbers and statistics is that they can paint a story.
Based on the Statistics Canada report referenced above, I’ve noticed several key insights about Canadians and their saving habits.
Average Financial Assets Double Between the Mid 30s & Early 50s
Another trend I noticed is that the financial assets held by the average group of Canadians more than doubled between the age group of 35 to 44 and 45 to 54. This could be due to multiple reasons, such as:
- Increased income
- Better budgeting skills
- Kids may be out of the house
- Investment growth
If you think about it, the average 45-year-old is more skilled and experienced than the same individual at 35. During this 10-year period, it’s common for individuals to move up their company and begin receiving considerable pay raises, bonuses, and other perks.
Additionally, most people in their 40s and 50s have passed the “age of irresponsibility” and tend to be a lot better at budgeting and staying on top of their finances.
Kids that they may have had to care for in the past are likely growing and moving out of the house, resulting in lower bills and groceries for many parents.
Another key factor to account for is that investments can grow a lot in ten years. Younger individuals are more likely to set higher risk tolerance on their investment funds, which can result in higher yields over the long term.
By contrast, individuals over 45 are more likely to lower their investment risk tolerance and may focus on slow, steady gains as retirement comes closer.
The key point here is that wealth is often a by-product of knowledge and time.
Canada’s Middle-Class May Not Have Enough Saved To Retire Comfortably
If you compare the total savings of the average Canadian over 65 to the total savings of the median Canadian over 65, you’ll notice a stark difference.
The median Canadian has around $374,800 saved by 64 before they retire. This accounts for all of their financial assets and their retirement pensions.
These days, $374,800 is not a lot to live on. Assuming that you live to the average life expectancy of 81 in Canada, that money needs to last you for another 15 years after you retire.
If you divide $374,800 across 15 years, the median retiree has just $24,987 to live on each year. Of course, this doesn’t account for CPP payments and other government benefits you may be eligible for.
Even including these payments, middle-class Canadians may have trouble retiring comfortably, especially with sub-par economic conditions.
Younger Canadians May Have More Difficulty Buying A Home
Canada is currently undergoing a housing crisis, and it’s affecting the younger generation of potential homebuyers the most. Many believe that the long period of low interest rates combined with increased demand throughout the country has driven home prices up significantly.
To combat this, the Canadian government recently passed a law prohibiting non-Canadians from purchasing real estate in the country.
However, this measure may not be enough to significantly reduce home prices.
A recent survey published in Global News Wire revealed that 23% of young Canadians “don’t see the point” in saving in today’s harsh economic environment.
In addition to saving for a home, inflation and the rising cost of living have increased household expenditure, leaving less for savings.
So, not only are home prices through the roof, but it’s becoming increasingly more difficult for young people to save up money in the first place.
Many younger Canadians are holding off on having children (due to increased mortgage and childcare expenses) or are moving to more rural areas to find cheaper housing.
- Related Reading: Cheapest Places To Live In Canada
What Is The Average Household Income In Canada?
The median after-tax income of Canadian families and unattached individuals in 2020 was $66,800.
An individual who earns $70,000 per year in gross income typically won’t be able to save as much as somebody with a $225,000 annual income.
To get a better understanding of savings (and how much you should have saved), it helps to take a close look at the median numbers.
The term “net worth” is often thrown around in conversations but is not always properly understood or referenced. Some people look at their bank account balance and savings account balance and believe that the combination of the two represents their net worth. This is not the case.
- Net worth = your total assets and savings – your total liabilities
So, let’s say that you have $50,000 saved, but you owe a total of $20,000 to various creditors. In this case, your net worth would be $30,000. Of course, this is an extremely basic example.
Normally, your net worth would also account for any equity that you have in your home and other assets that you might not own outright.
Now, here’s what the average net worth by age in Canada looks like, according to data from Fidelity and StatCan:
|Age||Average Net Worth (2019)|
|35 or under||$48,800|
|35 to 44||$234,400|
|45 to 54||$521,100|
|55 to 64||$690,000|
|65 or older||$543,000|
You may notice a similar trend in this table as the one above, where I referenced the average total savings by age in Canada. During their late-30s and early-40s, Canadians quadruple their net worth (on average).
This is likely due to the fact that they’re receiving more gainful employment opportunities as they gain valuable experience.
However, after retirement, the net worth of Canadians declines as retirees tap into their savings to support their living and enjoy life a bit.
An RRSP (registered retirement savings plan) is one of the most common retirement accounts held by Canadians. RRSP accounts are tax-deferred, which allows your accounts to grow quicker during your contributing years. You’ll pay taxes after retirement whenever you make a withdrawal from your RRSP.
Recently, Statistics Canada put together a conclusive data sheet detailing the average total of Canadians’ retirement savings, including the balance of their RRSP, LIRA, and RRIF accounts. Here’s what the data shows for 2019 (which is the most recent data available):
|Age of Canadian Taxpayer||Average Retirement Savings (RRSP, LIRA, RRIF)|
|35 or younger||$51,300|
|35 to 44||$90,900|
|45 to 54||$158,200|
|55 to 64||$244,500|
|65 or older||$283,000|
At this point, you may notice that this table doesn’t follow the same trend that the tables earlier in this article follow, where the individual’s net worth and total savings decrease after 65.
This is because Canadians are allowed to continue contributing to their RRSP until age 71. Even after retirement, many Canadians continue to contribute money into their RRSP accounts while they use some of their cash savings or liquidate some of their assets (i.e. downsizing their home).
The best way to make sure that you’re on track for retirement is to create a full personal budget and determine the total value of all of your savings, including:
- Retirement savings (RRSP, LIRA, RRIF)
- Financial assets (stocks, crypto, land, etc.)
- Non-retirement savings (cash savings)
Following Fidelity’s recommendation (see the table above), you should have at least one year’s worth of your current income saved by the time you reach age 35. By 50, you should have at least 6 years’ worth of your current salary saved.
This will ensure that you can continue to live comfortably as a retiree without having to live too frugally.
Alternative Solution: retirement Income Streams
If you’re reading this and are feeling somewhat uncomfortable about the amount you’ve saved thus far, you’re not alone.
A recent study conducted by the Healthcare of Ontario Pension Plan revealed that 75% of the 2,000 participants (ages 55 to 64) surveyed had less than $100,000 in retirement savings earned from pre-retirement income.
Assuming these Canadians have a house that’s paid in full, that’s barely enough to make ends meet for a few years into retirement.
To live comfortably, many of these individuals may need to postpone retirement and benefits or pursue retirement income. Thankfully, in today’s online economy, there are more opportunities than ever to earn side income.
I’ve met several retirees who are earning good money tutoring or teaching a foreign language online. I’ve also met some who drive for rideshare companies like Uber or Lyft to contribute to their retirement savings.
Some other retirement income ideas to consider include:
- Artisan work (custom woodwork, painting, etc.)
- Writing and editing scripts and blog posts
- Dog training
- Reselling antiques online
- Hosting an Airbnb on your property
To wrap things up, here are a few helpful tips that you can start implementing to start saving more money so that you can invest in your retirement (or just build up your savings).
1. Take Advantage Of TFSA Savings Accounts
If you don’t have a tax-free savings account (TFSA), then you should open one. These accounts incentivize Canadians to save, as they’re special accounts that the CRA doesn’t tax. The TFSA program began in 2009.
Every year since then, the CRA has allowed Canadians to increase the total balance of their savings by a certain amount (typically around $5,000). The current maximum TFSA limit is $81,500.
The money that you put into these accounts is never taxed and can be saved as much as you want. TFSA investment accounts allow you to further grow your money tax-free by investing in stocks, GICs, and more.
2. Maximize Your RRSP Contributions
If you work for an employer that offers an RRSP retirement plan, they will typically offer to contribute (match) a percentage of your investment up to a certain amount.
Figure out the maximum that your company is willing to contribute per pay period into your RRSP and maximize your contribution to match this number.
By doing this, you’ll essentially be doubling your RRSP savings while you’re working under your employer. You can always contribute more personally if you want to see your savings grow even more quickly.
3. Invest In Term GICs
A Guaranteed Investment Contract (GIC) is a great way to build your savings over time. These investment vehicles allow you to allot a certain amount of your money to a financial institution in return for a percent back on your investment. It’s a lot like loaning money to the bank.
Some GICs may offer up to 5% back on your money with a five-year term period. This means that you’ll receive all of your money back in five years, with 5% interest stacked on top.
Given the current inflation rates, it might be smarter to stick with shorter-term GICs, even if they don’t offer as high of an interest rate.
4. Maximize High-Interest Savings Accounts
High-interest savings accounts (HISAs) are just like regular savings accounts in your bank. The only difference is that these accounts pay you a higher-than-average interest rate on your saved money.
For example, EQ Bank has an incredibly high savings rate of 2.50%, which is far more than you’d receive from a standard bank.
5. Open A First Home Savings Account (FHSA)
If you’re concerned about your ability to save up for a house, the government recently launched a new type of registered savings account – the First Home Savings Account (FHSA).
This account is similar to a TFSA but is designed to make homeownership more accessible to first-time homebuyers. Any first-time homebuyer can open an FHSA. Here are the basics:
- FHSA contributions are tax-deductible (unlike TFSA contributions)
- The first year maximum contribution for 2023 is $8,000
- Unnused FHSA contribution room may be rolled over into future years (after 2023)
- FHSA accounts can be used to hold investments like stocks, bonds, ETFs, and GICs
- Profits realized in an FHSA account are 100% tax-free (no capital gains tax)
- FHSA accounts can only be used for purchasing or building a new house
You can learn more about the new FHSA account on the CRA’s website. Since the program just launched in mid-2023, many financial institutions still don’t offer these accounts.
However, an increasing number of banks and credit unions in Canada have started offering FHSAs.
6. Budget To Save
My last tip is the most practical – budget to save. If you don’t plan to save, then you’ll probably never save as much as you hope. I recommend using a budgeting app to give yourself a full view of your total expenses and the money you earn.
Once you have a solid budget, create a detailed plan to save a certain amount with each paycheque you receive.
Saving money can be hard. But with government incentives and high-interest savings accounts, anybody can start saving or investing their money tax-free.
Ultimately, the more money you save and invest now, the more comfortable you’ll be able to retire.
If you’re still having difficulty finding ways to save with your current expenditure, you should speak with a financial advisor who will be able to take a closer look at your finances and help you find ways to start setting aside more.
Looking for more great ways to start saving money?
Check out my ultimate guide to saving money (sensibly) next!