As personal wealth climbs, so does the pressure on Canadians to make smarter and riskier money moves
Canadians have never been wealthier, but also more on their own when it comes to managing that wealth, according to a new report.
The C.D. Howe Institute’s Pierre-Carl Michaud and Bernard Morency have written a commentary called ‘Learning to Fly: How Canadians Can Navigate a More Complex Financial Landscape’ and argue that the country’s financial environment has evolved faster than its citizens’ ability to keep up.
The result: Canadians are now “pilots” of their own financial futures, but many haven’t learned to fly.
“Households are now managing more money in situations where their decisions have far-reaching consequences,” the authors write.
According to the report, the average Canadian household’s net worth has more than doubled in the past three decades, rising from about $158,900 in 1990 to roughly $415,000 per person in 2024. But as assets have grown, traditional safety nets have eroded.
Employer pensions, especially in the private sector, have become far less common, shifting responsibility for saving, investing and decumulating to individuals who have to decide how much to save, where to invest, when to retire, and how to turn their savings into income.
The C.D. Howe authors warn that many aren’t equipped to do so with a survey of six fundamental financial questions on topics such as compound interest, inflation and risk diversification, finding that just over half of Canadians could answer more than three correctly.
But when asked about registered savings tools like RRSPs and TFSAs, fewer than one in four managed to answer more than three questions right. “Despite sustained efforts to improve it, progress has been modest,” the authors note.
Beyond saving and investing, retirees are now grappling with how to turn their wealth into sustainable income during the decumulation phase. The risks are stacking up: longer life expectancy, rising long-term care costs and growing reliance on home equity.
Fewer than 12% of Canadians have purchased life annuities, less than 3% hold long-term care insurance and under 1% have taken out a reverse mortgage.
Michaud and Morency outline three key levers to help Canadians navigate this environment more effectively:
- Financial literacy: “Financial literacy is the foundation” of sound decision-making, they write.
- Technology and advice: AI tools could help people plan better, but only if they understand the basics well enough to use them safely.
- Government action: The authors call for clear regulation around financial technology and suggest Ottawa consider a national retirement dashboard to help Canadians track savings and future income.
“Canada needs a ‘pilot’ in government charged with developing a personal finance flight simulator that Canadians can use to train in how to fly and land their personal finance plane,” they argue.
