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moneysense.ca, 10/12/06
Wealth of Canadians: Assets
In its Survey of Financial Security, Statistics Canada found that the median family unit had $229,900 in assets, which were divided into four categories: pension assets (the value of private pension plans excluding OAS/GIS or CPP/QPP), financial assets (stocks, bonds, GICs, mutual funds, savings accounts etc.), non-financial assets (real estate, vehicles, antiques, furniture etc.) and equity in business. The overall allocation of total assets of Canadians is as follows: Pension Assets (29%), Financial Assets (10.4%), Non-Financial Assets (50.1%) and Equity in Business (10.5%). As you might expect, the single biggest asset for Canadians is their personal residence valued at one-third of total assets.
The survey found that 58% of all family units had an RRSP with a median value of $30,000 (the average was $76,600). Interestingly, a mere 10.3% of registered assets are invested directly in equities with about half invested in mutual funds and income trusts.
61.9% of family units owned their home, 16.1% held other real estate like vacation homes, cottages or rental units and 75% owned at least one vehicle.
RRSP and Home Ownership by Age
| Age | RRSP Ownership | RRSP Median Value | Home Ownership | Owners with Mortgage |
|---|---|---|---|---|
| Under 35 | 43.5% | $7,500 | 31.9% | 88.5% |
| 35 to 44 | 63.3% | $22,500 | 68.5% | 81.2% |
| 45 to 54 | 68.1% | $40,000 | 74.5% | 59.6% |
| 55 to 64 | 69.4% | $60,000 | 76.7% | 38.5% |
| 64 and older | 51.2% | $50,000 | 69.2% | 12.0% |
Tomorrow, we will look at the debt picture of Canadians.
moneysense.ca, 10/12/06
It is interesting to see the jump in home ownership from the under 35 category to the 35 to 44 category. I guess that most of that is because under 35 includes a whole lot of people that are just starting out. Another interesting point (which matches the net worth stats) is that RRSP values actually max out in the 55-64 age range, after that it seems like people start spending the money they have saved all their lives, which makes sense.
Some of these statistics must be skewed. How on earth can someone retire with a measly $60K RRSP? Even in my peer group with a median $22K in an RRSP? Even that seems kind of low. There must be a lot of self-employed or business owners who make the numbers look rather screwy.
The percentages seem to be OK, though. 69% of my peers having homes seems about right and 81% having mortgages also seems about right. Among my peers, everybody who has single family homes have huge mortgages, but the condo people like me either have small mortgages or have them paid off.
Phil, your disbelief is common among people who are actively working on improving their finances, are good savers, etc. People in this group cannot believe thta themajority of people are so messed up financially.
It would be interesting to create a fictional person with ‘median’ data, and project how (badly) they will end up in retirement.
One other comment on this posting…
I would argue that the data of those with defined benefit pension plans is understated. The commuted values of these pensions (particulary indexed pensions for teacher, govt, police, etc) are invariably understated to what I believe is the true value.
From these numbers, I would infer that 25% of people never own a home. I find this surprising. When coupled with only 60K in RRSP, its scary.
Why dont I see more elderly homeless?
Phil: The average RRSP values are much higher than the median. For 35 to 44 it is $49,100 and for 55 to 64 it is $124,500. It suggests that a small fraction are diligent with their finances and the majority as Rob says are messed up.
Getting Rich: The data does not indicate whether someone has never owned a home. It is simply a snapshot of current homeowners.
“How on earth can someone retire with a measly $60K RRSP?”
It’s easily achieved by doing any two or three of the follwing:
1. Pay off your mortgage
2. Have a great pension plan
3. Invest outside an RRSP in things like Canadian equities that pay high dividends.
4. Live beneath your means.
Remember – RRSP’s aren’t for everyone
This may not be the best place for this question, seeing that’s not related to the post.
I’m looking for some web tools for looking at canadian stocks, charts, filters, etc., maybe even realtime pricing or order book info. So far I’ve been using the globe and mails tools which aren’t that good. Any suggestions?
Another great numbers post to put things in perspective. I guess to a lot of people financial freedom just isn’t as important as it is to others… namely me.
FrugalTrader
http://www.MillionDollarJourney.com
Hi CC. So you’re saying that Statscan’s definition of “median” is the traditional definition, meaning the halfway point between the largest RSP account and smallest RSP account, which is totally different from the weighted average? Even if that is the case, then if we assume the smallest RSP at age 64 is zero, then mathematically the largest RSP can really only be double, so $120K. But even that seems rather low to me… You’ve spent your entire working life putting money into an RSP until age 64 and all you’d have to retire on is $120K? I guess that’s better than $60K or the poor fellow at zero, but by no means would I consider that a comfortable retirement free of financial worries!
Phil: You are correct about Statscan’s definition of median. The average is the also the traditional definition (sum of all household RRSP amounts / no. of households). It doesn’t tell you what the maximum amount is; it could be anything.
Also, note that the median family had $68,000 in pension assets (if you include what Statscan calls the EPP or employer-sponsored pension plan). Close to half the family units had an EPP. I would consider that to be not nearly enough, but I guess most people are counting on the OAS & CPP for their retirement.
Phil: I found this statistic in the book “Bogleheads” that I just started reading:
“Take 100 young Americans starting out at age 25. By age 65, one will be rich and four will be financially independent. The remaining 95 will reach the traditional retirement age unable to self-sustain the lifestyle to which they have become accustomed.”