Net Worth Distributions of Canadians

[music-and-ski]

Following up on my analysis of expenditure data by Canadians https://www.early-retirement.org/forums/f28/canada-expenditure-data-for-65-a-104390.html , I downloaded the 2016 Survey of Financial Security to look at net worth.

The net worth distribution of 2 person households in the 45-64 age bracket is

the mean is 1.2M.

The net worth distribution of 1 person households in the 45-64 age bracket is

the mean is 470K.

The net worth distribution of 1 person households in the 65+ age bracket is

the mean is 535K.

The net worth distribution of 2 person households in the 65+ age bracket is

the mean is 1.4M

I primarily post these because I'm afraid to early retire, even though my NW is substantially above these mean values. Now I know that if I could get my spending down, I could retire, like other people in this survey do.

Maybe this one is more important. This is for families where everyone is over 44 years old and their major income source is investment income or retirement pensions. That is, these people aren't counting "Wages and salaries", "Self-employment income", "Government Transfers" nor "Other income" as their "Major source of income for the family unit". So, these people are retired. The distribution is

The mean value is 1.34M

Note all these NW calculations includes the value of pensions.

So, if you are Canadian, and your NW is over 2M, and you don't think you can retire, you probably have a spending problem...

 

[kcowan]

They should also include the value of homes and cottages. Certainly in Toronto and Vancouver, those numbers would be inadequate.

(You might get more interaction over on FWF.)

 

[Nemo2]

Our average annual expenditure over the past 12 years, (not including income taxes) , is $38,439 Cdn.

We want for nothing, and have even been able to throw in a little travel.

 

[Koogie]

So, if you are Canadian, and your NW is over 2M, and you don't think you can retire, you probably have a spending problem...

I am, I do and I don't....

We're not all 30 year olds who can go skiing all the time. I have a sick spouse who's future health care needs I have to plan for. Expensive health care needs.

Don't assume we are all in the same situation nor that our future requirements will be the same as our present needs.

 

[TheHobbit]

45-65 is a pretty big range. I'd big curious what the distribution was per decade.

With due respect to married folks out there, the mean net worth is 600k per person, not 1.2M. I always hate how they combine two peoples new worth and treat it as one....you can't sell the money twice. If you are married, your net worth is whatever you have together, divided by 2.

Or at least do a weighted average with divorces factored in, as that captures the full risk of the enterprise of marriage vs. unmarried folks out there.

That said, I'm not super surprised by the numbers. It shows you have conservative many folks are on here, having war chests of millions of dollars before retiring. They are easily some of the most well off folks on the planet, so shouldn't be that worried retiring, if they can't do it....nobody can.

 

[music-and-ski]

They should also include the value of homes and cottages. Certainly in Toronto and Vancouver, those numbers would be inadequate.

These statistics do include the value of second homes and cottages. That's part of my interest in this topic, as my forgone investment revenue and use costs (property taxes, maintenance, utilities, etc.) on my second home are keeping my w*rking.

 

[music-and-ski]

I am, I do and I don't....

We're not all 30 year olds who can go skiing all the time. I have a sick spouse who's future health care needs I have to plan for. Expensive health care needs.

Don't assume we are all in the same situation nor that our future requirements will be the same as our present needs.

I think even in Canada a big reason a lot of people don't want to retire early is the uncertainty over their future health and future spending on care. Yes, future requirements could indeed be a lot higher than present needs. But, also, future requirements could be a lot less than present spending. Future requirements are extremely likely to be less than your worst-case scenario.

Part of the reason to post the graphics for the distribution was to show the range of experiences, rather than focusing on the average. Averages are *very* misleading, and aren't a useful comparison. Everyone's situation is unique. The data show 13000 different situations, yours is probably reasonably similar to at least one of the 13000 (but maybe not.)

(In my defence I used the word "probably" and I also think your future health care expenditures would fit into my words "spending problem" since it's a problem that you have to manage with future spending. I'm sorry for your spouse's problem, best wishes and good luck.)

 

[Koolau]

I am, I do and I don't....

We're not all 30 year olds who can go skiing all the time. I have a sick spouse who's future health care needs I have to plan for. Expensive health care needs.

Don't assume we are all in the same situation nor that our future requirements will be the same as our present needs.

A serious question which, I'm certain, shows my ignorance. I thought Canada had universal health care coverage. Aren't DW's needs covered by the system? Just an ignorant American here, so please take no offense. None is intended though YMMV.

 

[cyber888]

I suppose 2 million canadian networth = $1.5 million US networth. I would say that's ok.

 

[Koolau]

I suppose 2 million canadian networth = $1.5 million US networth. I would say that's ok.

As always, it depends what you spend so YMMV.

 

[music-and-ski]

As always, it depends what you spend so YMMV.

My spending is too high.

 

[brett]

I see little value in understanding what the average net worth is or what the average spending is. I really only care about my net worth and my net annual
spend.

Plus, it seems to me that there are huge variances between net worth depending on where one lives. Same for average spend...it depends on one's lifestyle and to an extent on where one lives.

 

[Koolau]

I see little value in understanding what the average net worth is or what the average spending is. I really only care about my net worth and my net annual
spend.

Plus, it seems to me that there are huge variances between net worth depending on where one lives. Same for average spend...it depends on one's lifestyle and to an extent on where one lives.

I can attest to the "where one lives" part of the equation. One learns how to blunt some of the added costs of Paradise vs say, the midwest. Still, it's impossible to live here with the same spend level as in many parts of the mainland. It's just a fact of life.

I do appreciate seeing the NW distributions of Canadians (AND those in the USA in other threads). I view the info as more than just "financial porn." While it's true that our own experiences (NW and spend) are the keys to our own FIRE, seeing how others are faring may provide some insights not readily apparent from simply talking to our own circle of acquaintances or even those on this forum. But YMMV.

 

[Sunset]

A serious question which, I'm certain, shows my ignorance. I thought Canada had universal health care coverage. Aren't DW's needs covered by the system? Just an ignorant American here, so please take no offense. None is intended though YMMV.

Each province is a little different as it's Provincially supported.
Drugs are not included in Ontario unless like the USA one has a drug ins plan.
My relative with cancer was taking a drug that cost $70K per month, fortunately this person had from work a good private drug plan.
This person underwent many operations, including lung removal, and never paid a penny for any of it.

 

[Koolau]

Each province is a little different as it's Provincially supported.
Drugs are not included in Ontario unless like the USA one has a drug ins plan.
My relative with cancer was taking a drug that cost $70K per month, fortunately this person had from work a good private drug plan.
This person underwent many operations, including lung removal, and never paid a penny for any of it.

Thanks for the info. My knowledge of the Canadian HC system has just doubled. I guess the devil is always in the details just as in every other aspect of financial survival. So YMMV.

 

[music-and-ski]

I can attest to the "where one lives" part of the equation. One learns how to blunt some of the added costs of Paradise vs say, the midwest. Still, it's impossible to live here with the same spend level as in many parts of the mainland. It's just a fact of life.

I do appreciate seeing the NW distributions of Canadians (AND those in the USA in other threads). I view the info as more than just "financial porn." While it's true that our own experiences (NW and spend) are the keys to our own FIRE, seeing how others are faring may provide some insights not readily apparent from simply talking to our own circle of acquaintances or even those on this forum. But YMMV.

I think we get accustomed to a lifestyle based on our peers. Maybe we live in a place with high real estate and live next to neighbours with a lot of money. Over time, you forget that you are actually wealthy. So, one might keep working and working and working to "keep up with the Joneses", when, in fact, they just fell into that group of Joneses due to accident, happenstance, or out-of-date past choices. Using the data to see that you are unusual (compared to 13000 Canadians, even if not compared to your immediate peers), and in fact wealthy, might make you more free than thinking you need to keep up spending based on your past choices and your current peers. It might, for example, trigger a decision to move to a place with cheap real estate, where you can make more down-to-earth friends amongst your new neighbours.

On the other hand, it also works the other way around. People without money grow up in communities around other people without money, and don't see their full financial potential because their peers and experiences don't support a bigger picture.

My favourite example are the oil-company professionals who take ex-pat jobs planning to sack away a bunch of money for early retirement. Most of them (within in my own set of acquaintances) just start upping their spending to keep up with the ex-pat lifestyle, and work just as long and even harder than others who kept their normal oil-industry jobs. They get to spend a lot of money, but they also have to live in places they might not want to live in, separated from their family. I don't even think they end up with a lot of net worth, on average, because they blow it all and don't LBYM.

So, I think a lot of us can benefit, psychologically, from a bit of a reality check against 13,000 randomly selected Canadians.

 

[Nemo2]

Most of them (within in my own set of acquaintances) just start upping their spending to keep up with the ex-pat lifestyle, and work just as long and even harder than others who kept their normal oil-industry jobs. They get to spend a lot of money, but they also have to live in places they might not want to live in...

My first three years in Riyadh were on single status, (food & accommodation provided)........one time a buddy there said to me "Well, you'll need this, this, and this.......(to 'survive' there)".

I held up my bank book and replied "No, all I need is this".