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Survey of Financial Security

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The Daily

Thursday, December 7, 2006

The wealth of Canadian families increased substantially from 1999 to 2005, but they were carrying a much higher debt load as a result of growing demand for mortgages and consumer credit, according to new results from the Survey of Financial Security.

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The survey provides the most comprehensive statistical portrait yet of the net worth of Canadians, that is, the amount of money they would have if they liquidated their assets and paid off all their debts.

Note to readers

The Survey of Financial Security (SFS), conducted between May and July 2005, collected new information on the assets and debts of families and individuals in Canada.

The survey, which covered about 5,300 responding families, also sheds light on how wealth is distributed, the extent to which it is concentrated, the forms in which it is held and how these features are changing over time in the context of an aging population and an evolving economy.

The 2005 SFS updates information that was last available for 1999. Prior to that, there had been a 16-year gap since the last survey of assets and debts.

All asset, debt and net worth amounts in this article are expressed in 2005 dollars. Amounts related to income, however, are expressed in constant 2004 dollars.

Most of the information on assets and debts was collected for the "family unit", not for each individual in the family. The term "family unit" includes both unattached individuals and families of two or more. "Family" and "family unit" are used interchangeably.

Families of two or more are referred to as economic families, defined as a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common law or adoption.

It found that the median net worth of the nation's estimated 13.3 million "family units" amounted to about $148,400 in 2005, up 23.2% from 1999, after adjusting for inflation. In other words, half of all family units had net worth higher than this level, and half lower.

Total assets, everything from stocks and bonds to principal residences, amounted to almost $5.6 trillion, a little over 1.4 times the estimate in 1999. The increase was due primarily to favourable economic conditions, a strong real estate market and a rebound in the stock markets.

On the other hand, Canadians had debts estimated at $760 billion in 2005, nearly 1.5 times higher than the level in 1999. Three-quarters of this debt took the form of mortgages.

Loans in the form of lines of credit more than doubled during the six-year period, and accounted for 9% of all debt. Loans on vehicles accounted for 6.1% of the total, credit card debts 3.4% and student loans 2.6%.

Between 1999 and 2005, the median debt load for families rose 38.0% from close to $32,300 to $44,500. On average, Canadians had $13.52 in debts for every $100 in assets in 2005, up from $13.06 in 1999. This debt burden rose as high as $39.40 per $100 of assets for younger family units in which the major income recipient was under the age of 35.

Assets: Market value of real estate main factor in increase

The total value of assets (everything from pensions to financial and non-financial holdings) rose 42.4% between 1999 and 2005. The main contributor was the increase in the market value of real estate, largely the result of price increases.

The second largest contributor was assets held in private pension instruments, such as employer pension plans, registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs). The increase in this category was driven largely by sharp gains in the value of employer pension plans.

The single most important asset for Canadians was their principal residence, which accounted for one-third of the $5.6-trillion total. This was followed by employer pension plans, which represented 18.5% of all assets.

As of January 1, 2005, there were more than 15,000 registered pension plans (RPPs) in Canada covering 5.7 million members. Membership has risen steadily since 1999, despite declining pension coverage due to a larger increase in the number of paid workers with no registered pension plans.

A significant change in the composition of assets during this six-year period was growth investments in real estate such as cottages, timeshares, rental properties and other commercial properties.

The aggregate amount in this type of real estate was $481 billion in 2005, roughly 1.8 times what it was in 1999, in constant 2005 dollars. This was by far the largest rate of growth of any asset type.

About 9.4 million families, or 70.6% of the total, had some form of pension assets in 2005, whether they were employer pension plans, RRSPs or RRIFs. In total, pension assets peaked for families in which the major income recipient was aged between 55 and 64.

Debt load: One-third of families had mortgage debt

Between 1999 and 2005, total debt in Canada increased by 47.5%. This was largely due to two factors: the increase in the cost of purchasing a home and the increase in the proportion of families who owned a home with a mortgage.

The median value of mortgages on the principal residence amounted to $90,000 in 2005, up 17.5% from $76,600 in 1999. Just over one-third (34%) of all family units reported having this type of mortgage debt.

The second largest contributor to the increase in debt load was lines of credit, which more than doubled during the six-year period to roughly $68 billion. About 3.3 million families, one-quarter (24.9%) of the total, reported having a line of credit debt in 2005, up from only 15.4% in 1999.

The median line-of-credit debt surged from $5,800 to $9,000. Much of the increase was secured by residential assets in the form of home equity.

Families reported holding about $46 billion in loans on owned vehicles, a 41.3% increase, and $25.8 billion in outstanding credit card and installment debt, up 58.4%. Student loans approached $20 billion, a 15.8% increase.

Almost 11 million families reported owning at least one credit card last year. The median credit card and installment debt rose to $2,400 from $2,100.

Almost 3 in 10 families had no pension savings

An estimated 3.9 million Canadian units, 29% of the total, had no private pension assets in 2005.

The proportion was somewhat lower for economic families, 21.5%, that is, those which consist of two or more people related to each other. However, 45.2% of unattached individuals had no pension assets.

The majority of families with no private pension assets had lower income from employment.

For instance, among economic families with a major income recipient in the prime working age of 25 to 64, 16.6% had no pension savings. However, among those with earnings below $30,000, the proportion was nearly 64%.

Even though these families and individuals had little private savings, public plans such as the Old Age Security/ Guaranteed Income Supplement program and the Canada and Quebec Pension Plans will provide them with some income in retirement.

As well, most families with no private pension assets were relatively young. They were far from retirement and had time to accumulate assets. Close to 6 in 10 family units (57.9%) with no private pension assets had a major income recipient younger than 45.

Definitions, data sources and methods: survey number 2620.

A more detailed report, '"The wealth of Canadians: An overview of the results of the 2005 Survey of Financial Security" is now available as part of the Pension and Wealth Research Paper Series (13F0026MIE2006001, free) is now available from the Publications module of our website.

Data tables are also available for free on the Summary tables module of our website.

A complete analysis of wealth inequality is scheduled to be published in Perspectives on Labour and Income on December 13.

For more information, or to enquire about concepts, methods or data quality of this release, contact Client Services (toll-free 1-888-297-7355 or 613-951-7355;, Income Statistics Division.

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