What’s the median and average net worth in Canada or the United States?
What should your net worth be when you’re 40 years old?
What’s the average net worth of married couples in Ontario?
This page will answer these types of questions 🙂
Canadian and U.S. Median and Average Net Worths
- The cities with the highest household net worths in Canada are Vancouver, Calgary and Toronto.
- There are about 350,000 Canadians who have US $1 million in financial assets, not counting their principal residence. (about 1% of Canada’s population are liquid millionaires) (Source: Capgemini, World Wealth Report.)
- Canadians in total have approximately $7.3 trillion ($7,300,000,000,000) of combined net worth, ($9.2 trillion in household assets and $1.9 trillion in liabilities.)
- The median household net worth in the U.S. in 2010 was $77,300 according to the Federal Reserve. http://www.federalreserve.gov/Pubs/Bulletin/2012/articles/scf/scf.htm
- Average: The sum of all the data divided by how many entries there are.
- Median: The middle mark in a series, where half the population has more, and the other half has less.
Global Net Worths
According to Credit Suisse’s annual wealth report, global wealth reached US $250 trillion in 2015, slightly less than a year earlier, due to the increased strength of the US dollar. The underlying wealth trends do, however, generally remain positive. The rise in household wealth was particularly strong in the US and China between mid-2014 to mid-2015. “Wealth is (nevertheless) still predominantly concentrated in Europe and the United States. However, the growth of wealth in emerging markets has been most impressive, including a fivefold rise in China since the beginning of the century,” said Credit Suisse CEO Tidjane Thiam.
Millionaires around the world
There are 34,000,000 millionaires in the world. They make up 0.7% of the world’s adult population and accounts for 45% of the world’s collective wealth. In Canada, there were 1,100,000 people last year in 2014 worth at least US $1 million. That number dropped to 984,000 this year, thanks largely to the huge drop in the loonie. (source)
A person needs only $3,210 to be in the wealthiest 50% of world citizens. About $68,800 secures a place in the top 10%. Finally, the top 1% of the world’s richest people require a net worth of $759,900 or higher.
How Net Worth is Spread Around the World
14% of adults worldwide are middle class, with $50,000-$500,000 of assets. Global wealth is likely to continue to grow at an annual rate of 6.5% in the coming years, reaching 345 trillion US dollars in 2020, 38% above the current level of wealth. The US will remain the undisputed leader in terms of wealth, holding nearly a third of the global total.
The U.S.A. has the highest concentration of millionaires with 15.7 million people who have at least a million dollars.
How Net Worth is Divided By Global Population
How to read this chart:
- For the diagram above, if your net worth is over $1 million USD you are part of 34 million people who make up 0.7% of the world’s population and control 45.2% of all wealth.
|Rank||Country||Median Wealth Per Adult (USD)|
- The United States is ranked 27th on the list above with $38,786 per adult.
Median and Average Net Worth by Age Group
Net worth takes time to build up so in general the older we get the wealthier we become. There are 2 main ways to grow wealth; savings, and capital appreciation. We can save more by cutting our spending, like by moving closer to work to save money on gas for example. We can also increasing savings by increasing our income, for example by finding a second job. Acquiring multiple income sources early on in life and keeping them for as long as possible is a great strategy to rack up lots of savings over time. Capital appreciation can be made by owning assets that will go up in value over the long term. As people grow older they tend to make higher incomes, and own more appreciating financial assets. Both are conducive to a higher net worth.
In Canada, households with two or more income earners can build wealth faster than individuals. This is likely because families can pool their resources together to pay down debt and build up investments more quickly. As such, families between ages 35 and 44 have, on average, $250,000 more than unattached individuals in the same age group. The gap tends to widen over time.
Average Canadian Household Net Worth by Family Type and Age Group
Median and Average U.S. Net Worth by Age
We’ve all seen charts like the ones above. It shows statistically how much wealth is accumulated in each stage of people’s lives. But it only reveals how much other people are saving, not how much we should be saving ourselves.
Your target net worth
The charts below are my personal thoughts on net worth progression by age. Everything is in 2013 constant dollars.
- “Sufficient” means just enough for a modest yet still dignified financial future and retirement. But having to work past the planned retirement age is likely.
- “Good” means you have an average amount of wealth accumulated. You can expect to retire in your early to mid sixties if you wish, and enjoy a normal and comfortable retirement.
- “Excellent” suggests you are in the top 10% of your age group. Your extra savings and investment returns can translate into longer vacations, more free time, or early retirement. You will have more options in your golden years and financial stress in your life should be at a minimum. 🙂
- “Rich” is for a minority of the population who either have extremely high incomes or received some kind of gift or inheritance. This is how many in this category can reach financial independence relatively early in life. Achieving high investment returns would not be their primary focus. Instead their top priorities should be financial literacy, wealth preservation, and inflation hedging. This is because there is simply more for them to lose if they mismanage their finances. If they already have $10 million, chasing high investment returns is not as important as preserving the purchasing power they already have. So their investment strategies, risk tolerance, and goals will typically be very different than people who fit in the other three columns.
How to use the tables above:
Different parts of the world have different costs of living. The tables above assume a lifestyle in New York City which uses a cost of living index of 100 points. Most cities however will have a lower index because they are cheaper to live in.
Use the cost of living world map to determine your city’s Cost of living index which you can use to find out the comparable net worth amount for your own city.
For example Vancouver, BC has a COL index of about 73. This means it costs $73 in Vancouver to buy the same goods and services as $100 in New York City.
So for a couple around age 30 living in Vancouver who wants to have an “excellent” net worth, they should aim to have $292,000 in combined wealth ( or 0.73 x $400,000).
Assumptions regarding the net worth targets above:
- People will spend money responsibly even if they have a high earning potential.
- Assumes people retire at age 65
- Couples will stay together and have 2 children (the average US birth rate) per household during the couple’s lifetime.
- Since these numbers represent wealth, and not income, it’s better to view the tables as a relative measure of financial security, rather than standard of living.
How to Calculate Net Worth
This is the formula to determine one’s net worth:
Total Assets – Total Liabilities = Net Worth
However what constitutes as an “asset” can sometimes be debatable.
Here are some suggestions for calculating the most accurate version of one’s net worth.
Do include the following:
- Your home’s fair market value or government assessed value.
- Your vehicle’s value (eg: blue book price).
- Gold, silver, diamonds, fine art, jewellery, collectables and other valuable possessions.
- Any stock options that have been fully vested.
- The full amount inside a defined contribution pension plan (eg: RRSP, or 401(K) balance).
- The total amount of contributions you’ve personally made to a defined benefit pension plan.
Do not include the following:
- CPP or Social Security benefits. These are incomes promised by the government, not personal assets under your control.
- Common household items like furniture, clothing, etc.
If you need one, feel free to download this net worth template spreadsheet (Excel) to help calculate your net worth.