Yahoo Finance Here’s How Much the Average Retiree in Canada Has in Savings
As one approaches retirement or has already entered this milestone, one wonders how their savings stacks up against other parts of the world. With a Forbes survey reporting that over half of Americans being dissatisfied with the amount of money in their savings during retirement, one becomes curious if the U.S. is the only country feeling down about their golden year fund, and how retirement benefits and programs differ for average retirees in different parts of the world. Did Americans get the bad end of the stick or do other countries such as Canada feel the same struggles?
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A good comparison to choose from is The Great White North, bordering the U.S. and arguably being one of the most similar countries to Uncle Sam due to relatively similar economies and cost of living compared to the rest of the world, along with similar benefits to their citizens. But its still a different country, and that means different retirement savings, and slight differences in social security.
According to Investopedia, “The Canada Pension Plan (CPP) and the U.S. Social Security system are publicly provided pension systems. They both provide retirement, disability, and survivor benefits. However, the amount individuals pay and the benefits they receive differ.” The key differences between U.S. and Canada is the U.S. pays a higher maximum for individuals on social security, and more on average, but the catch is Canada has not only less taxed on social security for individuals on it but also offers more benefits as well. For one example, Canada also has a much smaller population than the United States, and like the Netherlands (known as the best country to be on social security during retirement), it benefits from pension plans offered by individual businesses, something that has become a rarity in the United States. Also, like the United States, Canada pays out a below-average amount, though still reaching around 50%, taxes are lower, running at just 4.95% in Canada, lower than the 6.2% in the United States.
With all this in mind, to find out how many average Canadians are comfortable and satisfied with their savings in retirement GOBankingRates used sources from Federal Reserve’s Survey of Consumer Finances, Spring Financial, The Motley Fool Canada, Investopedia, Social Security Administration, and ChatGPT to find what the average retiree has in their savings. Whether you live in Canada or just looking to compare, here’s some recent statistics and surveys on how ready Canadians are to kick their feet up and enjoy their golden years worry free.
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The Average Retirement Savings in Canada
According to Ratehub, the average Canadian over the age of 65 has around $129,000 saved in their Registered Retirement Savings Plan (RRSP). When including Tax-Free Savings Accounts (TFSAs), this figure rises to about $160,000. On average, a Canadian retiree has $319,000 in total retirement savings. However, this amount can vary widely depending on individual circumstances and financial planning.
Average and Median Retirement Savings by Age
Here’s a breakdown of the average and median retirement savings by age in Canada, based on data from the Federal Reserve’s Survey of Consumer Finances, and other sources including ChatGPT:
Under 35
Average Savings: $49,130
Median Savings: $18,880
Ages 35-44
Average Savings: $141,520
Median Savings: $45,000
Ages 45-54
Average Savings: $313,220
Median Savings: $115,000
Ages 55-64
Average Savings: $537,560
Median Savings: $185,000
Ages 65-74
Average Savings: $609,230
Median Savings: $200,000
Ages 75 and Older
Average Savings: $462,410
Median Savings: $130,000
The Importance of Saving for Retirement
Retirement savings are crucial for ensuring financial security in your later years. While government benefits like the Canada Pension Plan (CPP) and Old Age Security (OAS) provide some income, they are often not enough to support a comfortable lifestyle. For example, in 2022, the average CPP monthly amount was $702.77, with the maximum set at $1,253.59. The maximum OAS monthly amount was $642.25. Combined, these benefits provide an annual income of around $22,750, which is typically insufficient for most retirees.
Strategies to Boost Retirement Savings
To build a robust retirement fund, consider the following strategies:
Start Early: The earlier you begin saving, the more time your money has to grow through compound interest.
Maximize Contributions: Take full advantage of RRSP and TFSA contribution limits to reduce taxable income and grow your savings tax-free.
Employer Contributions: If your employer offers a pension plan or matching contributions, ensure you contribute enough to maximize these benefits.
Diversify Investments: Spread your investments across various asset classes to manage risk and improve potential returns.
Automate Savings: Set up automatic transfers to your retirement accounts to ensure consistent contributions.
Seek Professional Advice: Consult with a financial advisor to develop a personalized retirement plan and stay on track to meet your goals.
The Reality for Many Canadian Retirees
Despite best efforts, many Canadians find themselves with less savings than needed. According to an April 2024 AARP survey, 31% of adults saving for retirement are unsure if they will have enough saved, and 33% believe they will not have enough.
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This article originally appeared on GOBankingRates.com: Here’s How Much the Average Retiree in Canada Has in Savings
