Most of Canada’s Huge Pile of Savings Are Held By The Wealthiest Households

Canadians have been on a savings spree like few other points in history, but it might not be what it seems. Statistics Canada (Stat Can) data shows household savings have been soaring. The country expects these savings to be unlocked and create an economic boom in the future. We broke down households by income fifths (quintiles) to better understand the trend. The vast majority of savings are wealthy households saving for a rainy day. The bottom two-fifths are drawing on savings and/or borrowing debt to live.

Canadian Households Saved $38.09 Billion

Canadian households have been saving at a tremendous rate. Total savings were $38.09 billion in Q2 2021, working out to an average of $2,462 per household. It represents 10.7% of disposable household income, which is very high and typical of a recession. An elevated savings rate makes sense in this environment. Usually during recessions people sock away a little extra. This recession, public health restrictions add an additional hurdle to spending. Let’s see how this trend breaks down.

Canadian Household Savings By Income Quintile

The quarterly net savings for an average Canadian household by income quintile.   

Source: Statistics Canada; Better Dwelling.

Canada’s Top Earners Represent 115% of Savings

Canada’s top two-fifths of households represent the vast majority of these savings. The top fifth of households by income saved an average of $14,248 in Q2 2021. This represents 115.7% of the net savings of all households, which is an enormous amount. Using the fact that this quintile saved over 100% of the net, you should be able to see where this data is going.

Canada’s Upper Middle Class Saved An Average of $5,039 In Q2

The fourth quintile, the second-highest by income, saved a chunk of change. They saved $5,039 in Q2 2021, just over double the average of all households. These households represent 40.9% of the total savings in the quarter, the largest share since Q1 2020.

Canada’s Middle Class Saved $956 On Average

The middle fifths of households, aka the third quintile, saved much less than those above. These households saved an average of $956 dollars in Q2 2021. They were under a fifth of the upper-middle, and half of the national average. Their savings represent just 7.8% of the net household savings. One of the most interesting points to pay attention to is how sharp the drop is from the second quintile to the third.

Lower Income Quintiles are Going Into Debt

Once you get below the third quintile of income, households see a net loss of savings. More bluntly put, they’re cash-flow negative and either spending savings or borrowing more. The second quintile (second-lowest fifth of incomes) saved -$1,743 in Q2 2021, and that wasn’t a smudge on your screen. Their net savings are negative on average, meaning they spent more than saved. In total, they represent -14.2% of household income saved, weighing the total down.

Canada’s Lowest Income Households Have Deeply Negative Savings Rates

Households in the bottom fifth of incomes incurred a significant quarterly deficit. These households had a net savings of $6,188 in Q2 2021, which is a little mind-blowing. Their deficit is high enough to cancel out the gains of the third and fourth quintiles combined. The distribution is -50.3%, meaning this group canceled out half the increases in the net savings.

Unlocking high savings commonly involves cutting taxes on goods or running inflation higher. Considering various luxury taxes were rolled out, high inflation is the path taken. This might be an effective way to do so if household savings are more broadly distributed. However, the bottom two-thirds of household savings are running negative cash flow. Further, the middle is only saving a modest amount, likely less than a mortgage payment. High inflation releases some funds, but not without negatively impacting most households.



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  • Heather 2 years ago

    Thanks, Daniel. This makes more sense. I was wondering where the idea that everyone was ‘saving’ was coming from. It’d be interesting to see a breakdown on the US. I bet it is similar or worse than ours.

  • Jason Azevedo 2 years ago

    These are rookie numbers for a single construction worker that has has cheap rent from staying in the same place with a good landlord for a long time which means his rent is very low.

  • questions guy 2 years ago

    quintiles are a little useless here…

    I bet the difference between the 81st and 91st percentile is dramatic, and even more so the 95th+ percentiles.

    I bet the 80th and 60th have more in common…

    just wondering aloud…

    • Felix 2 years ago

      You just demonstrated why quintiles are useful: The more broad the data, the less useful it is.

      You’re also demonstrating why information too narrow is useless: If the point is two-thirds of people aren’t saving, what do I care if the difference between the 81st and 91st percentile are drastically different, if the gap between the previous quintile is still significant enough that it represents 50% of net savings.

      I’ve noticed increasingly when people say something it’s useless, it’s because they don’t understand why other people use it.

  • John 2 years ago

    The way the lowest earners are characterized in this article is highly misleading. A quintile = 20% of the data sample.

    15% of Canadians are retired.
    5% of Canadians receive some form of welfare / social assistance.

    Therefore we’re effectively looking at the 20% of earners who have either no income (only savings in the case many retirees), relatively low income, or have a salary paid for by the government. Fixed income social assistance earners probably net out somewhere around even and only make up 25% of the sample. The average net savings would be heavily skewed negative by the number of retirees spending via savings or home equity without a proportional income (CPP, maybe minor corporate, or none) to balance out.

    This average $5k negative is their living expenses for 3 months … that’s why the number is also so consistent in comparison to the other earning brackets.

    • Marc 2 years ago

      “The way the lowest earners are characterized in this article is highly misleading.”

      You’re wrong since it’s based on earned income not transfers or investments like retirees classify, but your beef is with Stats Can. You should call them up and tell them they’re being deceptive and you have the real scoop. Record it for us, we’d like to hear gov laughing hysterically. In two languages.

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