Saving money and sticking to a budget can be stressful, especially with the current housing crisis, inflation and rising cost of living. However, saving is required for healthy finances and achieving financial goals, whether your savings are for an emergency fund, down payments, or retirement. It is wise to have a plan and strategy in place to help you build up savings. If you’re unsure of where you stand with your savings journey, considering the average Canadian savings by age can be a useful benchmark.
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Unfortunately, many Canadians do not feel prepared for retirement or secure with their current savings. The average Canadian savings by age may be lower than you think. The younger you are, the better position you are in to start with small savings and working upwards. If you find yourself a little older, there is still a lot you can do to get your savings on track. Consider building a budget or seeking the support of a financial advisor, regardless of your age. By employing some basic financial strategies, you can meet the national averages defined in this article, perhaps even surpass them to find true financial freedom!
Related Reading: How to Retire Early in Canada
Savings and Time: The Correlation and Why it Matters
Well-invested savings grow significantly with time through the concept of the time value of money. This can be seen in Registered Retirement Savings Plans (RRSP), Tax-Free Savings Accounts (TFSA) or virtually any other investment portfolio. When interest is re-invested, it contributes to significantly higher growth. People often state that the younger you start to save or invest, the less you must save or invest overall. This is because over time your savings compound. Eventually, they begin to grow exponentially.
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You can see the importance and significance of growth over time when you look at stocks. As an example, a single $40 Coca-Cola stock purchased in 1919, with all dividends and interest re-invested in the company, would be valued at over $10 million today. This is a dramatic indicator of the time value of money! While finding the right investment like 1919 Coca-Cola may not be possible, the same principle exists with basic saving and investing principles. The point here is that Canadians do not need to be seeking out the “lottery” stock. Rather, they need to return to fundamental savings basics. In essence, paying yourself now will result in significant returns in the future. And the sooner you do this, the more returns you’ll get.
To help you forecast the effects of saving now, you can use a retirement calculator or savings calculator. These tools demonstrate how small investments will grow over time. You can play around with the inputs, such as how much you have to put aside and the rate of growth. This can help you adequately plan for the here and now, plus the future effect.
How much money does the average Canadian retire with?
At retirement, the average Canadian has $645,599 in retirement savings. Furthermore, an additional $163,600 in general financial savings, creating a grand total of $809,199. Although, statistics vary from source to source depending on the sample used.
Moreover, the number of Canadians building their savings has been growing. However, it is estimated that Canadians need about $700,000 to $1,000,000 in savings to retire comfortably. Not enough Canadians have the savings to retire comfortably yet.
For younger Canadians, this is the time to consider what you would like your retirement to be like and start setting goals. Then, begin saving smartly towards your objectives. For older Canadians, it is the time to create a plan for a more aggressive savings budget. Ultimately, everyone’s financial situation is unique, but if saving and retiring is important to you, it’s wise to begin planning and executing.
Related Reading: CPP And Retirement Planning: How Much Will I Get?
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What is the average net worth of a retired Canadian?
The average net worth of Canadians who have hit the age of retirement is about $543,200. Although, these statistics are accurate as of 2019 per Statistics Canada, so the numbers may be different in the present.
Net worth considers all assets held, less any liabilities, including equity in owned properties. Many Canadians have held onto their homes as a retirement nest egg. However, this would not be considered savings while the money is tied up in unsold property and real estate takes time to offload. People need a place to live, even if they were to sell their homes, they would incur transition costs and new cost of living amounts. But owning a home is a significant part of wealth for many retired Canadians. Especially considering they presumably paid into a mortgage their whole life which is a form of saving. Certainly, senior Canadians who own their primary residence are in a good financial position.
Related Reading: Top 10 Retirement Planning Tips for Canadians
How many Canadians retire with no savings?
Nearly 32% of Canadians aged 45 to 64 do not have any money saved for retirement, according to a poll. About 53% stated they do not have enough money for retirement, even if they do have some savings. Unfortunately, many Canadians believe they will never retire, particularly since the pandemic and recent economic strains. This study is indicative of that. Furthermore, many believe they will always maintain some amount of work for income, whether it’s full time or part time.
How much does the average Canadian have in savings?
Below is a table that shows the average Canadian savings by age:
| Average Canadian Savings by Age | RRSP and Other Retirement/ Pension Accounts | TFSA | Bank Accounts | Total Savings |
| Under 35 | $9,905 | $8,395 | $10,720 | $29,020 |
| 35 to 44 | $15,993 | $3,995 | $7,163 | $27,151 |
| 45 to 54 | $41,998 | $4,806 | $8,951 | $55,755 |
| 55 to 64 | $91,941 | $13,199 | $21,036 | $126,176 |
| 65 and older | $146,782 | $38,115 | $74,328 | $259,225 |
Keep in mind this data does not reflect equity in real estate. You will notice in the 35 to 44 age bracket that there’s a bit of a dip in total savings. This is likely attributable to investment in a home and other major life milestones, like starting a family. The information above reflects purely savings held for retirement or general use.
Related Reading: What is the Average Net Worth by Age in Canada?
Meeting Average Canadian Savings by Age
Saving money for retirement or other goals can be challenging. Perhaps you don’t know where to start or find your earnings stretched thin as is. Plus, planning to have the lifestyle you want can add to this stress. There is no doubt the younger you start to save for retirement, the more money you will have in retirement. This is due to the time value of money whereby savings and interest compound significantly over time.
If you have not yet planned for retirement or begun savings, that is okay. Many Canadians are in this position and struggling with the same worries as you. What is important is that you begin to design the life you want now. Think about your retirement; plan out a budget that will allow you to live comfortably today and tomorrow. Financial advisors are ready to help plan these important details and life milestones. If you need help at any point in your savings journey, fill out this quick questionnaire to find a financial advisor today!