Richest Canadians had double-digit drop in household saving rate last year

Canada’s richest households made 5.2% more last year than in 2020, but net saving among that top quintile dropped, Statistics Canada said Wednesday.

Further, “households in every age group decreased their average net saving in the fourth quarter of 2021 compared with the previous quarter,” StatsCan reported.

Household income for the top quintile was $178,100 in 2021, up by 5.2% from $169,300 in 2020. Household income for the lowest quintile was $34,000 in 2021, up by 2.9% from 2021.

“Most of these gains were derived from wages and salaries,” the agency said.

StatsCan also released average household net saving by income quintile on Tuesday.

For the highest income quintile, net saving was $13,843 in Q4 2021, down by 12% from $15,657 in Q3 2021 and down by 17% from $16,711 in Q4 2020.

One explanation is that the easing of pandemic restrictions increased opportunities for households to spend.

For the lowest income quintile, net saving was negative $7,479 in Q4 2021, down by 14% from negative $6,584 in Q3 2021 and down by 15% from negative $6,482 in Q4 2020.

By age group, seniors’ savings rate dropped the most (-30.6%) from Q3 to Q4, StatsCan said, but added: “While average net saving for households with seniors dropped below levels last seen before the start of the pandemic, this may not necessarily imply a worsening of their economic well-being, since households in older age groups tend to have accumulated significant pension assets from which they may draw to fund their consumption.”

The value of government pandemic support measures, as a share of disposable income for the lowest income quintile, declined to 2.4% in 2021, compared with 10.9% in 2020, StatsCan said. This was due to the winding down of a number of support measures in 2021.

Covid-19 support measures represented 1.0% of disposable income for the highest income quintile in 2021, down from 3.3% a year earlier.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.