Canadians to boost savings in 2013

Canadians planning to save in 2013 will put away an average of $9,859 – an increase of nearly $600 over last year, or approximately 7%, according to the BMO Household Savings Report released today.

Read: Vik’s Pick: More TFSA room, more savings?

The report details the investment vehicles Canadian savers plan to use:

• The majority will use an RRSP or a chequing account (63% and 57%, respectively)
• 49% will use a Tax Free Savings Account (TFSA)
• 29% will use a high-interest savings account
• 25% are stashing their savings in GICs

Read: Retirement savings back on Government’s agenda

The report also poll shows only half (48%) say they are saving enough to meet their goals, with high expenses (71%), low income (65%), and debt repayment (52%) cited as the top barriers to increased savings.

According to BMO Economics, the personal savings rate in Canada, calculated by Statistics Canada, currently lies near historic lows at 3.9%. By comparison, the rate climbed above 6% per cent during the height of the latest recession, and reached almost 20% in the early 1980s.

Read: Debt drags down retirement savings

The report also identifies the most common savings goals:

• Vacations, luxury items, entertainment and hobbies topped the list, with 66% putting cash away for these purchases
• Retirement savings and emergency savings tied for second at 42%
• Nearly one-third of Canadians are putting aside money for home renovations in 2013, while one-in-five will be saving towards the purchase of a new vehicle
• Education savings are on the priority list for 19% of Canadians, followed by the purchase of a new home (15% per cent)

Staff

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