A new collection of data released by Statistics Canada highlights savings growth across the country. By analyzing and reviewing the data, it’s possible to answer important questions about the state of the Canadian economy. Furthermore, knowing how much the average Canadian saves annually will help people understand larger trends at play. 

So, what does the average Canadian’s bank account look like, and how much do Canadians typically save? The answers to these questions may also help you better manage your own finances.

How Much Does the Average Canadian Save Annually? 

Statistics Canada reports that in 2018, Canadian households had an average net savings of about ~$852. However, the top 20% of income earners saved ~$41,393 per household. Conversely, households in the lowest 20% spent ~$27,935 more than they earned as they consumed more than their annual income and either had to incur debt or draw down previous savings to finance their consumption.

More recently, rate comparison site Finder found that Canadians saved approximately five times more of their disposable income in 2020 compared to 2019 as a result of the COVID-19 pandemic and government policies for dealing with it. According to its study of data from the OECD, Canadian households saved an average of $5,816 in 2020, far outstripping the $1,144 seen in 2019.

Nevertheless, the usual rate at which Canadians save is low. Last year’s impressive spike in savings probably won’t last; the savings rate (ie saving as a percentage of household disposable income) is projected to fall over the next two years.

In fact, according to Statista, the saving rate of Canadian households has fluctuated considerably during the coronavirus (COVID-19) pandemic. As of the second quarter of 2020, the saving rate of households in Canada peaked at 28.2 percent. In the last quarter of 2020, the average Canadian household saved 11.5 percent of their disposable income.

Of course, there are many reasons that Canadian save so little. With daily expenses, mortgages, and a high cost of living, Canadians have plenty of things to spend on.

How Much Does the Average Canadian Save Per Year? 

Let’s take a closer look at how much Canadians save each year. Given the extraordinary circumstances of 2020, we’ll exclude last year’s sudden jump in savings.

According to jobillico.com, the average full-time Canadian salary in 2021 was $65,773. The salary trend is positive, and the majority of Canadian workers are earning more than they did in the previous year. If we assume, however, that the saving rate returns to pre-pandemic levels of 1.9–3.6%, we can expect the average Canadian household to save between ~$1,249 and $2,367 after paying for loans, bills, or the occasional vacation.

Age and Savings

Age also affects how much people save. In 2018, major Canadian income earners under the age of 35 years saved only a fraction of their income. But Canadians 65 and older had an average net dissaving of $17,129 in that year

Ratehub recently parsed out Statistics Canada’s historical data to illustrate how much Canadian households have saved, on average, by age—and whether the savings are in a registered retirement savings plan (RRSP), tax-free savings account (TFSA), or a non-registered account. 

According to Statistics Canada, this discrepancy between age groups is largely due to the fact that older Canadians have built retirement funds over the years. On average, persons 55 to 64 years old have more wealth than other Canadians. A CIBC survey found that the average amount that Canadian seniors save is about $345,000. Many Canadians in other age brackets have little or no retirement savings.

Where Should You Save?

Apart from your standard savings account, you have several options for saving your money that can yield a decent rate of return.

RRSP Accounts

The good news about having a traditional full-time job is that most large companies offer Registered Retirement Savings Plans (RRSPs) for their employees, many of which are employer-matched. An employer-matched RRSP is a retirement savings plan to which your company contributes either the same amount or a certain percentage of the amount that you contribute to your account.

If you work for a company that matches your RRSP contributions, you have an incredibly easy way to save small amounts of your paycheck that quickly add up to a lot more than you put in. An employer-matched RRSP is an easy way to build your retirement savings.

High-Interest Savings Accounts

A high-interest savings account (HISA) will help you grow your funds faster than standard accounts. The annual yield of the latter is usually only about 0.06%. In contrast, $4,000 in a HISA earning a competitive rate of 2% will yield $80 by the end of the fiscal year.

HISAs are usually offered by online banks and credit unions. Good options include the EQ Bank Savings Plus Account, with an interest rate of 1.2%; and the Saven Financial High-Interest Savings Account, with an interest rate of 1.55%.

Tax-Free Savings Account

With a tax-free savings account (TFSA), you deposit funds and simply watch your account grow. Unlike more restrictive investment options, there are no limits on when you can withdraw your money and no penalties for doing so. But the government limits the amount that you can contribute each year, a maximum that changes annually. When you withdraw money from your TFSA, the amount withdrawn is added to your maximum contribution for the following fiscal year. 

Why Are Canadians Bad at Saving?

A major reason that Canadians save less than people in many other countries is debt.

Canadians are spending more and more of their income to pay off debt, leaving less of that income to devote to savings. In addition, the cost of living across Canada has spiked even as wages have stagnated. After a person pays for rent or a mortgage, gas, groceries, essential services like daycare, and debt, he doesn’t have much left over to put away for a rainy day. 

Even so, whatever you can save, you should save. Saving even a little is better than saving nothing. It all adds up in the long run. So even if your savings isn’t what you’d hoped it to be, make the deposit anyway. By taking advantage of savings accounts that yield a return, you will accumulate dollars more quickly than you may think.