Would a quarter of $1 million a year solve all of your financial woes? Almost 1,500 Canadians were asked how much pre-tax money would make them feel “financially comfortable” in a survey by financial services firm Edward Jones. The verdict came in at cool $250,000. But why stop there? Being comfortable is great, but it’s certainly not going to buy you that fancy watch you’ve been eyeing or get you to Rome anytime soon. When asked how much they’d need to achieve the lifestyle they “truly desire,” most participants added another $50,000 to that total. The net worth of Canada’s 1 per cent club differs by province. Story continues after video.
While both figures are certainly a far cry from Canada’s median after-tax income of $56,000, the survey found that people always felt they earned less than they desired, regardless of which end of the earning scale they were on.
“The more people earn, the more they believe they need,” Patrick French, principal of solutions tools and consulting with Edward Jones, told HuffPost Canada on Wednesday. “That’s because as salary increases, so does expenditure.”
The data was broken down by region: Albertans had the grandest financial aspirations, requiring almost $350,000 to feel comfortable. The phenomenon could be attributed to prolonged economic hardship and mounting debt in the province, French surmised. Manitoba and Saskatchewan needed the least, at about $157,000.
Older Canadians require the most
Figures also differed across generations: Canadians aged 55 to 64 had the most extravagant desired salary at a whopping $398,347. The report said that “this age group may be saddled with unwanted financial responsibilities.”
French said those lofty ambitions can be partially attributed to failing to properly plan for retirement. Another financial burden could include helping children and grandchildren pay for homes in expensive real estate markets across the country.
Millennials turned out to have the most modest outlooks: people aged 18 to 34 said they’d feel comfortable with about $166,000 a year. “One reason could be that millennials are at a stage in their lives where they are more focused on consumption,” French said. “They aren’t thinking so much about retirement, running out of time to pay off debts or how to leave something to their kids.” Looking to boost your paycheque? You might want to look into machine learning. Story continues after video.
Millennials are underestimating their future needs: French
While millennials lack in imaginary money, they’re totally flush in another, equally intangible way. “Young people have the one resource no one can make more of — time,” French said. “Their figure might be lower because they feel they have time to earn money and save, which is true. If they act on that idea, of course.” But the lower figure could also be the result of a lack of financial literacy and awareness of just how much money they’ll need as the decades roll on, French said. “It’s also possible that younger people are vastly underestimating how much they will need to live the kind of lifestyle they want, which could be a major problem as they get older.” The survey polled 1565 Canadians between May 23 to 26, 2017. A probability sample of the same size would yield a margin of error of +/-2.5%, 19 times out of 20.