Canadians saved an average of $8,764 last year and plan to set aside an average of $9,635 for the year ahead, according to the second annual “BMO Household Savings Report.” Conducted by Pollara, the report reveals the following:
- 2013 marked a significant drop in the percentage of Canadians who did not save anything, from 28 percent in 2012 to 17 percent in 2013, meaning more Canadians are saving a portion of their income.
- The most common barriers for Canadians for meeting their savings goals include insufficient income to save (69 percent), followed by high expenses (67 percent) and management of debt (50 percent).
- Canadians plan to save an average of $9,635 in 2014, with the majority using a checking account or Registered Retirement Savings Plan (RRSP, the Canadian equivalent of a U.S. IRA account) (66 percent and 55 percent, respectively)
- Half (47 percent) of Canadians will use a Tax Free Savings Account (TFSA), while 31 percent will use a high-interest savings account.
According to BMO Economics, a unit of BMO Financial Group, the most recent official data show Canadians were able to set aside more in 2013 than the year prior, and forecast that Canadians will maintain the pace in 2014.
“Canadians increased their savings last year in response to higher long-term interest rates and with one eye on elevated debt,” says Sal Guatieri, senior economist, BMO Capital Markets. “We expect the saving rate to remain above 5 percent in 2014, as households are borrowing at the slowest rate in three decades and long-term interest rates are likely to drift higher due to a stronger economy and a reduction in Federal Reserve stimulus.”