In Canada, Discussions, Money, Retirement, Wealth

Canada Levels of Wealth: Top 1% in Net Worth by Age & Income in Toronto, Vancouver, Montréal and Calgary

Canadian net worth is a little trickier to pin down because all the surveys and info are so U.S.-centric. That said, KA came up with a great way to triangulate how to figure out net worths in Canada.

Remember to focus on your focus

PLEASE be careful when reading these numbers and then perhaps falling into a deep black hole of despair and scream “WTF I will never reach these numbers!“… because these are comparisons to other people, when you should in fact, focus on your own focus and journey.

Their money is not your money, and there are also a million other ways they may have gotten a head start that you did not have or still have a lasting opportunity or head start because of things like race, where they were born (countries matter), etc.

Read: The real difference between the rich and the poor (more slides in the post)

I will not lie, these are the some of the same starts I plan on giving Little Bun because while I will drain my retirement accounts to $0 to pay for my own retirement and elder care as I age so that I do not burden him with these amounts, I am certain he will still have more than a healthy chunk of money to inherit by the time we both pass.

Net Worth Percentiles in Canada

I realize that a lot of people are not geeks like I am, so I will aim to try and explain some of these terms simply.

What are percentiles?

Think of percentiles like ranges.

If you are in the top 1%, it means 99% of people below you, have less than you do.

If you are in the top 10%, it means 90% of people below you have less than you do.

In Canada, these are the top 1% percentiles for net worth by Household & Individual. I took the household amount and split it 50/50 because it’s important to me to note what the individual amounts are too, because if you’re a single person (or tracking your individual journey like myself) comparing yourself to these benchmarks, it can be disheartening unless you realize it’s TWO people making up that amount.

Of course, it isn’t like that in all cases, but it’s a pretty common to have people report by household income, and a lot of surveys ask you to report by that; they just don’t take the extra step to split the info in at least half to make it more accurate for an individual.

When it is noting that it takes $140K / $70K to go from the 90% to the 95%, it means you need that amount to move up from the top 10% to the top 5%.

Then to go from the top 5% to the top 1%, you need $8.757M household or $4.378M individually.

Now if we look at it by age, obviously we do not have a breakdown by race, gender, or any other factors like “what’s their average income”? which I think would be quite handy as you could pinpoint down your benchmark versus someone else, especially accounting for differences in gender and race, but this is what we have:

I can tell you that to reach those amounts by those ages, you need to make a serious amount of money and starting very young. At least $100K+ a year, and you need to be saving $50K a year consistently.

How do I know this?

Because I am almost 40, and I have around $1.06M (as of the start of 2021). I will easily hit that $1.2M by age 40, and I have been saving on average $50K a year to invest, and I make over $100K on average.

I started doing this when I was 25, which means I have had 10+ years to save $50K a year on average.

Side note: When I work, I actually make about $250K/year but I only work 50% of the time, so I average out about $125K/year as a salary, if you want to use some rough numbers. I worked out my real numbers lately versus hours worked, and it was actually lower at around $106K, but that’s neither here nor there.

Timing also matters because some years, I saved $200K (one early notable year was 2015), and other years spent into the negatives (2009 comes to mind).

Now this only gets you to age 40 with those amounts.

Beyond that, the truly wealthy start to break away with other assets like their businesses (think: small businesses that are franchised like dry cleaners, mechanic shops, etc), or with other significant assets.

Again this is American but let’s use it as a rough benchmark:

You can see that once it starts to hit Upper Income net worth upwards to $10M, the business goes from 7.9% to 24.5% of their assets, and then it becomes 49% of their assets when you are above $10M into the Ultra Rich range.

You can read more about this chart here: The top 1% holds 40% of U.S. wealth

Other ways to hit that 1%

OR.. you consistently made a lot of money early on, and you were FRUGAL AF. You saved every penny, you saved more than $50K a year, and you were very careful to invest into the market early on, or into other ventures.

More likely though, is you owned a business and then kept it to grow or sold it. Or maybe you inherited the money from family or via a divorce; this is the #1 way most women end up being millionaires, FYI. I am a little sad about it, hopeful for change in the future, but those are the facts – it is either via inheritance or divorce.

Businesses are not easy to start & are hard work

My partner and I were talking about starting businesses early on in our relationship but then we realized we didn’t want to work that hard.

For us, going from let’s say $3M by the time we retire (total net worth), to $13M by the time we retire but having worked insane 100+ hours on our business trying to get it off the ground and so on, is not worth the extra $10M.

I know it sounds insane, even bizarre…. but it really isn’t.

You lose your whole life to such ventures, and I can tell you even with just my limited experience with blogging and social media, it takes up even more than 40 hours a week for something so “simple”.

Now imagine having customers? A location to manage? Staff? Equipment? No thank you.

It’s a lot of work, and we do not begrudge them any penny of their hard earned money. We are too lazy for that in the sense that we have a work life balance we want to achieve, and for me, being a freelancer and working 40 hours or less a week, is ideal for the amount I get.

I could work more, and make more (80 hours = double the pay if I take two contracts on at once), but… WHY? What would I do with all of that extra money?

I really think that while I wouldn’t say no to MORE money, I say a firm no to MORE work.

A business is also a lot of risk. You are putting so much money into it to make it work, and what if it fails? It all goes down the toilet, and it could have been by no fault of your own (e.g. pandemic).

I will mention that I could have turned my blogging/social media into a real business/career but I also chose not to go on TV or write a book to be published by a big house and then shopped around the world because I also value privacy and having a normal life. Being “famous”, even an “influencer” is something I do not envy nor want. It’s a lot of pressure, hours, your whole family and life goes under the spotlight and the stress is unimaginable to me, versus the payoff of what….. fame (don’t want it), or more money (not my real goal in life).

My real goal in life is to make more money without working more.

Moving on, we leave the top percenters and move into looking at AVERAGE (not median) net worths in Canada.

Why does average versus median matter?

  • Average = ALL the net worths, averaged out and divided by person.
  • Median = The middle net worth in the entire range (and sometimes far more accurate as an ‘average’)

This is because you have a few really high net worth individuals that skew the range up in an average, but in a median, they’re revealed. If we take a look at the (American) Net Worths for the top 1%, average and median by age:

You can see that the average at 18-24 seems REALLY DARN HIGH at almost $87K, but when you look at the MEDIAN or the middle number in the pack, it’s at $4K which seems a lot more realistic.

It’s because you have people aged 18-24 who have a heck of a lot more money than the “true” average.

Of course, the median can also be skewed in the sense that if you have more people aged 18 versus aged 24 reporting numbers, you can see the median skew younger rather than truly be an equal and fair average by age, but nothing is ever perfect in statistics is it?

If you’re interested, you can see all the other charts on net worth by age here, with and without homes.

So? Thoughts on the 1% in Canada? Thoughts about your own wealth journey and goals?

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Sherry of Save. Spend. Splurge.

Am my own Sugar Daddy. Am a millionaire at 36 after getting out of $60K of student debt in 18 months, a little over a decade earlier, using TheBudgetingTool.com. I have worked 50% of my career (taking 1-2 year breaks), and quadrupled my income within 2 years of graduating, going from $65K to $260K with an average lifetime savings rate of 50%. I have 11 side incomes that are on track in 2020 to make me $50K - $75K. I could retire today if I wanted, but love my work-life balance as a freelancing consultant in STEM (Science, Technology, Engineering, Math). I am all about balance - between time and money, and also enjoying my money. I also post daily on Instagram @saverspender.

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