How much money should I have saved by age 40?

All the while, you’ve got a serious case of FOMO every time you check social media—all those friends who are jetting off on lavish vacations, buying new cars and splurging on cottages. How are ordinary Canadians actually doing this? And how can you get ahead and save more?

What’s the average savings for Canadians in their 30s? How much should they have saved?

A lot of Canadians are managing to save, despite the above financial challenges and obligations. According to Statistics Canada’s 2019 figures (the most recent available), the average person under age 35 had saved $9,905 towards retirement (RRSPs only) and held $27,425 in non-pension financial assets. For Canadians aged 35 to 44, these numbers are $15,993 and $23,743, respectively.

The table below shows the average savings for individuals and economic families, which Statistics Canada defines as “a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common-law union, adoption or a foster relationship.” In 2019, the average household savings rate was 2.08%.

The pandemic had a positive effect on savings; the disposable income of the average Canadian rose by an additional $1,800 in 2020, according to the Bank of Canada. That meant most Canadians were able to save an average of $5,800 that year.

Despite this pandemic silver lining, most Canadians aren’t saving enough for their age groups. When CIBC polled Canadians in 2019 on how much money they’d need in retirement, on average they guessed they would need $756,000. The actual amount you’ll need depends on many factors—to estimate your own number, check out CIBC’s retirement savings calculator.

How to prioritize financial goals and obligations in your 30s

With so much going on in your 30s, it can be very challenging to save when you have so much to pay for. After all, you may be carrying a lot of debt due to student loans, a car loan or a mortgage. In the third quarter of 2023, Canadians aged 26 to 35 owed an average of $17,159, and Canadians aged 36 to 45 owed $26,155, according to a report from Equifax.

Maybe debt is less of a concern for you, but you’re saving for a big goal—like a down payment on a home—and you’re feeling the strain of a high interest rate and inflation. Perhaps you’d like to start a family, but you’re worried about the costs of raising a child. Or you’ve dabbled a bit in the stock market and want to make a few more investments.

Whatever your situation, talking to a financial planner about your finances and your priorities can help you map out a customized financial plan that factors in your immediate goals—as well as long-term savings and retirement strategies. This might include focusing on paying off high-interest debt, putting aside money for a home, shopping around for life insurance and ensuring that you save each month.

How to grow your money while you save

The good news is that any savings you set side can grow—and grow rapidly if you opt for a high-interest savings account (HISA). Unlike a typical savings account, which pays very little interest, a HISA offers a significantly higher interest rate. And unlike a locked-in investment such as a guaranteed investment certificate (GIC), a HISA allows you easy access to your money, with no penalties for withdrawals.

Earning high interest means you can grow your savings quickly. The CIBC eAdvantage Savings Account, for example, is currently offering 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 0.25% on balances up to $200,000.

Get into the saving habit

Saving—whether it’s for an immediate goal or for retirement—takes a little planning and discipline. With all of the competing priorities of being in your 20s or 30s, it can be challenging to set aside money every month. To make it easier, consider setting up automatic contributions on paydays—and watch the interest build up.

Capitalizing on the high interest, like that offered by the CIBC eAdvantage Savings Account, can give you the peace of mind that you’re growing your savings at an accelerated pace—and reaching the financial targets you’ve set that much faster.

Read more about saving:

• How much money should I have saved by age 25?
• How much does the average Canadian have in savings?
• 6 ways Canadians can invest in an RESP on a tight budget
• How to start saving for retirement at 45
• The best financial apps for Canadians