What is the average saving by age in Canada?
Saving is hard, but the earlier you do it, the faster you can reach retirement.
* This article was originally published on August 4, 2021 and was last updated on June 27, 2023.
It feels like everyone out there giving financial advice is beating the same drum: “save your money!”
“Start early!”
“You’re not investing enough!”
“Stop eating avocados so you won’t retire in poverty!”
Yeesh!
Don’t get me wrong – saving money is important. But it’s also difficult thanks to wage stagnation, long-term inflation, and the extremely high cost of housing. But how much should you really be saving? Are you really that far behind?
How much do I need to have saved at my age?
The answer to how much you should have saved depends on how you want to live in retirement.
Data from Statistics Canada shows that retired Canadians have a median annual income of $37,100. Of that, a median of $21,100 comes from RRSPs and pensions and $16,100 comes from government programs including Old Age Security (OAS), Guaranteed Income Supplement (GIS), Canada Pension Plan (CPP), and Quebec Pension Plan (QPP).
Depending on how much you’re planning to receive from CPP and OAS, and the kind of lifestyle you want to live in retirement, you need to have around $450,000 on hand if you want to retire today (*1).
Now comes the upsetting math about compound interest.
The longer your money is invested, the more it can earn. If you start saving for retirement in your 20s, the amount needed looks similar to a car payment. If you start around the time you’re 50, it’s more like a mortgage payment. If you wait much longer than that, you might not be able to reach your goal.
Assuming you’re just getting started and investing your money with an average annual return of 6%, here’s how much you need to put away every month to get to $450,000 by age 65.
How much you should be saving for retirement by age
| Age today | Monthly saving |
| 60 | $6,450 |
| 55 | $2,746 |
| 50 | $1,547 |
| 45 | $974 |
| 40 | $649 |
| 35 | $448 |
| 30 | $316 |
| 25 | $226 |
| 20 | $163 |
| 18 | $144 |
If you don’t want to put that much money toward savings, here’s how much you already need to have on hand in order to meet your goal, organized by the amount you want to save each month(*2):
| Age today | Desired monthly saving amount | ||||
| $250 | $500 | $1,000 | $1,500 | $2,000 | |
| 60 | $320,686 | $307,755 | $281,892 | $256,029 | $230,166 |
| 55 | $224,816 | $202,298 | $157,261 | $112,225 | $67,188 |
| 50 | $153,741 | $124,115 | $64,864 | $5,612 | |
| 45 | $101,048 | $66,153 | |||
| 40 | $61,983 | $23,181 | |||
| 35 | $33,021 | ||||
| 30 | $11,549 | ||||
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According to a study by the Healthcare of Ontario Pension Plan, 35% of working Canadians between the ages of 18 and 34 have no retirement savings. Let’s change that.
If you start investing at age 20, a $400 monthly investment with a 6% annual return will net you over $1 million by the time you turn 65. If you wait 10 years, you'll end up with about half that - roughly $570,000.
The takeaway from this is that it’s best to start as early as you can and choose investments with higher rates of return.
Let’s say you earn as much as the average Canadian, $54,600, and want to have the same level of income in retirement. The amount you need to save depends on how much time you have.
If you start at age 30, you need to save 11% of your pre-tax income to enjoy the same level of income in retirement. If you start at 40, you need to save 18%. If you wait until you turn 50, you’ll need to save 42% of your pre-tax income to maintain your income in retirement.
Percentage of income needed to save (*3)
| Age today | Percentage of income to save (%) |
| 60 | 65% |
| 55 | 42% |
| 50 | 32% |
| 45 | 24% |
| 40 | 18% |
| 35 | 14% |
| 30 | 11% |
| 25 | 8% |
| 20 | 6% |
| 18 | 5% |
How much do people my age have saved on average?
No matter how old or young you are, saving for retirement is a big job. Even if you start very young, it takes a lifetime of commitment to adequately save for a comfortable retirement. But how do your retirement savings compare with others around your age? This table shows 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 (*3).
| Age range | Type of savings | |||
| RRSP | TFSA | Non-registered | Total saved | |
| Under 35 | $17,753 | $7,577 | $30,977 | $56,307 |
| 35 - 44 | $49,014 | $8,778 | $46,367 | $104,159 |
| 45 - 54 | $98,447 | $10,823 | $105,050 | $214,320 |
| 55 - 64 | $150,312 | $21,489 | $127,007 | $298,808 |
| 65+ | $129,920 | $26,471 | $162,130 | $318,520 |
Note that this table only takes savings and investments into account. It doesn't consider total net worth, which is the value of all your assets (including savings as well as things like your home) less all of your debts.
What can I do to save more for retirement?
Saving for retirement is not an easy task. But there are things you can do to make it easier.
Consider your overall financial picture. The amount you have saved is only one indicator of your potential for a comfortable retirement. Consider your total net worth. For example, if you have little in savings but own a home and have paid off your mortgage, your net worth may be higher than someone with sizable savings, and little or no equity in their home. If you have consumer debt, such as credit card debt, it almost always makes sense to pay off your balance before putting money towards savings.
Take advantage of the appropriate programs. The two best financial tools to save for retirement are the RRSP and TFSA. Both of these shelter your investments from tax, letting them grow faster and getting you to retirement sooner.
Invest your money. Savings accounts are great, but they can only grow your money so much. The best high interest savings account in Canada currently pays 4.30%. You can hold just about any type of investment in your RRSP or TFSA, so consider investing your retirement savings in a well diversified portfolio that can earn more money in the long run.
Just get started. ‘Some’ savings is better than no savings, and even if you're putting away $10 a month for your retirement, you're doing a favour for your future self. Don't let the thought that you can't save enough stop you from saving at all.
The bottom line
The earlier you start saving for retirement, the better off you'll be. But even if you haven't gotten started yet, there's still time for you - no matter how old you are. Work on getting your finances in order, pay off your consumer debt and take advantage of your RRSP and TFSA to help your retirement savings grow.
Want to learn more about saving for retirement? This article takes a closer look at how much you should have saved for retirement. And this helpful tool lets you calculate how much money you can save in a year.
Also read
Some assumptions:
1 You spend 25 years in retirement, your investments earn 2% annually while you’re retired, you make a single annual withdrawal increasing by 2% every year to match inflation.
2 Your savings goal is $450,000 by age 65, your investments earn 6% annually, and you make a single annual deposit equal to 12 monthly payments.
3 You plan to retire at age 65, your investments earn 6% annually, you plan to receive $16,100 in OAS and GIS payments, and you wish for your total income in retirement to equal your income after savings during your working years.
Source: Statistics Canada Table 11-10-0016-01. Data reflects the average savings of Canadian households in 2019. Age group refers to the primary income earner.