Canadian savings rate jumps to 28.2%, says Statistics Canada
For decades we’ve been told that Canadians – once known as a nation of savers – had shifted to become spenders.
No more. According to figures from Statistics Canada reported on by U.S. News and World Report, we are piling up the savings these days. The article notes that by mid-2020, Canadians were saving an incredible 28.2% of their disposable income, up from just 2-3% before the pandemic.
“There’s a pot of cash that’s basically sitting there and we’re interested in monitoring where that goes,” states Statistics Canada economist Greg Peterson in the article. “It’s a kind of notable divergence from what we usually see.”
Peterson states in the article that Statistics Canada is curious as to whether Canadians will pay down debt with their stockpile of cash, or spend it on goods and services, which would benefit the re-emerging economy.
Where did the extra money come from?
“Disposable incomes jumped sharply on higher government transfers – namely emergency wage benefits – while household spending fell amid COVID-19 shutdowns,” the article tells us. That seems right. Back in the spring, when the first pandemic-related restrictions began, there wasn’t much to spend money on other than groceries and gas. Things have been slowly improving ever since.
And certainly many Canadians have been counting on the CERB benefit during these months of the pandemic.
Let’s face it; we are in a crisis situation and it’s always good to have a little money in the wallet to help tide you through.
A survey out in early September from Sun Life finds that nearly half of us “feel less financially secure due to COVID-19.”
Forty-four per cent of those surveyed by Sun Life who say their mental health has been affected by the pandemic cite “financial stress as the main factor,” a Sun Life media release notes.
Younger Canadians appear to be the most worried group, the survey finds.
So, putting it all together, we’ve suddenly changed back to a nation of savers, and it’s quite possibly the uncertainty of our recovering economy that’s to blame. While things are returning slowly to a more normal state, there are still people out there who haven’t been able to get back to work – not everything has re-opened, or re-opened fully.
Having a little cash on hand for emergencies makes a lot of sense in this situation.
However, if you are sitting on excess cash for the short-term, consider earmarking a little bit of it for your retirement savings as well. A good place to tuck away a few loonies can be the Saskatchewan Pension Plan. You can set up SPP as a “bill payment” using your online banking website, and direct some of your extra dollars to them, either a little or a lot. With SPP there are no pre-defined contributions; it is up to you to decide how much to chip in. Your future you will thank you for any stray dollars you can send his or her way.
Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.