Canadian households led by individuals under 35 have experienced the most rapid wealth accumulation in the country over the past four years, according to a new analysis from the Royal Bank of Canada. This remarkable financial growth, however, is shadowed by a significant and troubling trend: this same demographic has simultaneously endured the lowest income growth nationwide.
The Pandemic Wealth Surge
Since the onset of the COVID-19 pandemic, the net wealth of younger households has doubled, a rate that outpaces all other age groups. This surge was primarily fueled by a substantial increase in financial assets. A unique combination of factors contributed to this boom, including extensive government support like the Canada Emergency Response Benefit (CERB), a robust stock market, and significant generational wealth transfers. The spike in real estate values during the pandemic also played a crucial role for those who entered the property market.
Furthermore, this age group stands alone in seeing a decline in mortgage debt since 2020. RBC economist Rachel Battaglia, the author of the report, notes that some young people benefited from rising home prices and historically low interest rates if they bought, while others, constrained by affordability, avoided taking on new mortgage debt altogether, thereby insulating their balance sheets.
The Stagnant Income Reality
The impressive wealth story has a critical catch. While their asset sheets flourished, the disposable income for Canadians under 35 grew by a mere 18% over the same four-year period. This figure is 16 percentage points lower than the growth seen by Canadians aged 45 to 55 and eight points below the national average.
This sluggish income growth has failed to keep pace with inflation, making under-35s the only demographic in Canada where purchasing power has effectively eroded. The root cause lies in their vulnerability within the labour market. Young workers are often concentrated in industries like retail, hospitality, and food services, which are highly sensitive to economic downturns.
The data is stark: nearly 40% of the rise in Canada's unemployment rate in recent years is attributable to young workers. The employment rate for this group is on track for a three-percentage-point drop from 2020, indicating a shrinking proportion of young people earning employment income.
Future Financial Security at Risk
This growing disconnect between accumulated wealth and stagnant earned income raises serious questions about the long-term financial security of young Canadians. The RBC report warns that as housing and equity markets normalize and the temporary boost from pandemic government support fades, these hard-won wealth gains could be vulnerable.
There are already signs of a slowdown. In recent quarters, wealth accumulation for households under 35 has decelerated more sharply than for any other age group. While RBC offers a hopeful outlook that an improving labour market could prevent further erosion of their financial standing, economists plan to monitor the situation closely. The sustainability of this generation's wealth is now a key focus for future economic analysis.
