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2. Net Worth (Wealth)

Financial Security - Net Worth (Wealth)

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Net worth, also referred to as wealth, is one measure of an individual's material well-being. It is the amount by which assets differ from liabilities or debt.

Net worth represents the degree of flexibility Canadians have to respond to unexpected events (such as a job loss), or to opportunities (such as starting a business), or to needs that arise (such as paying for a child's education). Building up net worth is also a key part of retirement planning, enabling a more comfortable retirement.

The Net Worth (Wealth) indicator shows the net worth of Canadian families, including their median net worth, assets and debt.

• National Picture — In 2005, the median assets of Canadian families was $229,930 and the median debt was $44,500. Their median net worth was $148,350, 23.2% higher than in 1999.[1]
• Gender — For Canadian families headed by a man, the median net worth was $184,964 in 2005, which was $79,494 higher than the median net worth of families headed by a woman.
• Age — In 2005, the median net worth was highest among families whose head was between 55 and 64 years of age.
• Family Type — Elderly families had the highest median net worth in 2005, whereas unattached individuals had the lowest median net worth. Couples with children under the age of 18 had a median net worth of $189,000 in 2005.
• Income — Higher median net worth corresponded with higher income in 2005. Canadian families with an after-tax income of $50,000 to $74,999 had a median net worth of $260,300, while families with an after-tax income of over $75,000 had a median net worth of $505,700.

National Picture

The median value of assets owned by Canadian families climbed from $184,622 in 1999 to $229,930 in 2005. The median debt also rose over this period, but by a smaller amount, rising from $32,257 in 1999 to $44,500 in 2005. The median net worth of Canadian families reached  $148,350, an increase of 23.2% over 1999. Most of the growth was driven by a higher market value for real estate, as well as an increase in the number of homeowners. These factors accounted for half of the total growth in assets.

Growth in pension assets, particularly employer pension plans, accounted for another 28.7% of total asset growth over this period.[2]

For every $100 in assets, Canadian families had on average $13.52 of debt in 2005.

In 2005, principal residence and other real estate accounted for the largest type of asset, representing 42.0% of total assets of all Canadian families. This was followed closely by private pension assets which accounted for 29%. However, equity in business, at 10.5% of the total, was the fastest growing asset, with the median value rising 52.3%, from $10,368 in 1999 to $15,794 in 2005.

Roughly 69% of Canadian families had debt in 2005.  Mortgages on a principal residence or other real estate accounted for the greatest share of that debt, at 75.3% of the total debt of all Canadian families. Line of credit, at 9% of total debt, was the fastest growing type of debt, with median value increasing 56.3% between 1999 and 2005, mainly due to an increase in home equity lines of credit.

Gender

The median net worth of all Canadian families headed by a woman (major income recipient) was lower than that of families headed by a man in 2005. The median net worth of Canadian families headed by a woman was $105,470 compared to $184,964 for families headed by a man. The gap in net worth between families headed by a man or woman also increased $9,084 between 1999 and 2005.

The gender gap -the ratio of women's to men's net worth- was widest among families headed by a man or woman over the age of 65 and below the age of 35. It was narrowest among men and women aged 55 to 64 years. The change in their net worth between 1999 and 2005 also varied considerably by age. For example, among men and women aged 65 and up, the gap widened the most -- increasing $24,370 between 1999 and 2005. On the other hand, among Canadian men and women aged 55 to 64 the gap narrowed by $85,341 over this same period.

Age

Family median net worth was higher for families with an older family head, up to age 65. In 2005, median net worth peaked at $407,417 among families where the family head was between the ages of 55 and 64. The drop in net worth among those aged 65 and older is not surprising because older people are more likely to draw on their assets to supplement their income when they retire.

On average, families where the family head was below the age of 35 had $39.4 in debt for every $100 in assets. Families headed by individuals aged 65 and older had the lowest debt-to-asset ratio with just $2.26 in debt for every $100 in assets. The debt-to-asset ratio was highest among families with a family head below the age of 35 and it decreased with age.[3]

Family Type

In 2005, elderly families had the highest median net worth largely because more live in a mortgage-free home and their pension assets tend to be higher. Unattached individuals, including elderly unattached individuals, accounting for 33.2% of all families, had the lowest median net worth, at $34,700.

Income

Higher median net worth corresponded to higher income in 2005. The median net worth of Canadian families with an after-tax income between $50,000 and $74,999 was $260,300. For those with an after tax-income of $75,000 and up, median net worth was just over $500,000. Between 1999 and 2005, median net worth grew the fastest among those with an after-tax income of $40,000 to $49,999 (by 27.8%) and $50,000 to $74,999 (by 26.4%), while it decreased among those earning $20,000 to $29,999 after taxes (by 21.2%).

Footnotes

1. The net worth of each Canadian family was first calculated and the median of these amounts is what is reported here.[Back to Text]
   
2. Growth rates calculated by HRSDC.[Back to Text]
   

3. Source:Statistics Canada. 'The Wealth of Canadians: An Overview of the Results of the Survey of Financial Security 2005'. Pension and Wealth Research Paper Series. Ottawa, Statistics Canada, 2006. (Cat. No. 13F0026MIE-No. 001).

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Date Modified:

2013-05-22