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We look at how much Canadians have saved, plus the biggest life expenses for your 20s, 30s, 40s and beyond.
With the high cost of living taking a big bite out of Canadians’ disposable income, it can seem challenging to put away any savings. But the right financial tools—such as a high-interest savings account (HISA) and tax-sheltered registered accounts—can help you keep working toward your financial goals and even grow your money, whatever stage of life you’re in.
Canadians aren’t doing too badly when it comes to average savings, socking away funds both inside and outside of registered retirement savings plans (RRSPs). According to Statistics Canada data from 2019 (the most recent information available), we’ve saved this much on average, not including private pensions and non-financial assets like real estate:
That was a few years ago. What happened during the pandemic, when travel restrictions, lockdowns and economic uncertainty put a pause on spending? Many households saw their savings grow.
According to the Bank of Canada, 2020 saw an “unprecedented increase” in savings of about $5,800 per Canadian, totalling $180 billion. (About 40% of this amount was accumulated by high-income households, which were less affected by pandemic-related job loss than lower-income households.) Canadians collectively saved an extra $350 billion by the end of 2021, according to Statistics Canada. Much of that money has since gone toward a return to spending, as well as paying down debt and mortgages. And speaking of debt and mortgages…
Your financial goals will change significantly with every new decade. Here’s a look at the big expenses you may need to plan for in each phase of your life:
There’s a lot to spend on in your 20s. Rent is often a major expense. For example, the average rent for a bachelor/studio apartment in Toronto is now $1,427 per month; in Vancouver, it’s $1,489. Paying off student debt might also be a priority. The average 20-something with a bachelor’s degree owes $30,600 at graduation, while a college grad owes $16,700. You might also need funds for trips abroad, socializing with friends, and buying or leasing a car.
Still, it’s good to get into the habit of saving early, whether it’s for a financial goal or an emergency fund. Consider setting up automatic transfers to put a percentage of your income into a HISA, such as CIBC’s eAdvantage Savings Account. It currently offers a 5.25% interest rate for four months when you open your first account, on balances up to $1,000,000. And if you’re able to save $200 a month, you’ll earn an additional 0.5% on balances up to $200,000.
By your 30s, you’re likely earning more than you did in your 20s, but you also have several new expenses to cover. Maybe you’re getting married—the average wedding cost in Canada is $22,000 to $30,000. Or you’re growing your family; on average, parents pay $508 per month for full-time daycare, according to Statistics Canada. Or maybe you have a pet that you dote on—that could set you back a few thousand dollars a year. And if you plan to buy a home, the average monthly payment for a new mortgage in Canada was $2,135, as of the first quarter of 2024—expect to spend more in pricey markets like Toronto and Vancouver.
If you’re saving for any of these goals (or something else), using a HISA will help your money grow and keep up with inflation in the meantime.
If you’re in your 40s, you may have started saving more seriously for retirement, knowing that maximizing RRSP contributions can also yield sizable tax returns if your income is higher. The average RRSP contribution of a Canadian aged 45 to 54 is $4,200 per year, reports Statistics Canada.
Upsizing to a larger home or undertaking home renovations are also common in your 40s. And then there are kids’ post-secondary costs to cover. Putting money into a registered education savings plan (RESP) is one smart way to save, especially with the incentive of free government grants.
By the time you’ve reached your 50s, you’re likely looking ahead and planning for retirement. But first, maybe you’re considering helping your child buy their first home—which is common these days. Ontario parents are contributing $128,000 on average, and Vancouver parents are chipping in $204,000, according to a recent CIBC Capital Markets report.
Your own goals might include buying a cottage or taking “bucket list” trips. And, as part of the sandwich generation, you might also be helping to support your parents. The cost of caring for an elderly parent, on average, totals $6,000 a year. Then there’s the expense of estate planning to ensure your money and assets are distributed according to your wishes upon your death. This might involve preparing a will, hiring a financial planner to set up a trust, or purchasing life insurance to cover estate costs.
Registered accounts, which can provide tax-free growth of your savings or defer taxes until you withdraw the funds in retirement, are powerful tools for meeting your financial goals. These include:
Whatever your money goals, it’s wise to work with a financial advisor who can look at your situation and help you plan holistically. They can assist in assessing your savings, drawing up the right financial strategy and choosing the optimal savings vehicles.
Saving in this tough economic environment is possible. And with your ever-changing financial goals, it’s important to ensure you have adequate savings at every life stage.
This is a paid post that is informative but also may feature a client’s product or service. These posts are written, edited and produced by MoneySense with assigned freelancers and approved by the client.
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Thanks for the article. Always enjoy reading this type of information. I wonder if median numbers were available and would be more helpful than average? Also, feel like it’s important to note that despite the annual limit those opening a TFSA account for the first time have accumulated room to contribute from time they were age eligible for TFSA.
Lmao ok
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