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Young Canadian households have built wealth faster than any other age group since 2020, but their income gains shows a different picture.
Households under age 35 nearly doubled their net wealth over the last four years, yet they’ve simultaneously experienced the slowest income growth of any age group.
Wealth gains largely came from an increase in financial assets, including cash deposits, and sizable growth in the value of their properties.
Pandemic-era government support (like CERB) provided significant cash flows to young households, allowing them to build financial reserves. Stock market appreciation and generational wealth transfers also likely contributed to these gains. The sustainability of those gains, however, is threatened by stagnating income growth for young households.
Lower liabilities boost net wealth for young households
Asset growth, however, hasn’t been the only source of wealth for under 35 households. Young households have also seen liabilities shrink—primarily reflecting lower average mortgage debt.
Those that bought or refinanced a home during the ultra-low interest rate period of 2020 and 2021 benefitted from low borrowing costs, which enabled faster debt repayment.
But, this is unlikely the whole story.
Mortgage exposure has also been declining for young households, reflecting reduced home buying activity. By postponing or forgoing homebuying due to affordability constraints, some young households avoid new mortgage debt, while those that own real estate retain pandemic-era price gains
This trend is evident in Ontario, where the average first-time buyer age increased from 38 to 40 between 2019 and 2024.
Generational income divide widens
Recent wealth accumulation contrasts sharply with income growth for younger households.
Young households experienced the slowest disposable income growth of any age group since Q1 2020, rising just 18%—16 percentage points below their 45 – 55 year old counterparts and 8 percentage points below the national average. This makes under-35s the only group where income growth has failed to keep pace with inflation.
Labor market challenges drive sluggish income growth
Sluggish employment compensation growth—the primary source of income for households under 35—is the primary driver for weak disposable income growth.
We’ve previously discussed how labour market volatility impacts younger workers disproportionately, given their concentration in industries that are vulnerable to economic shocks like retail, accommodation and food services. Young Canadians have also taken longer to find work, contributing to labour market weakness for this age group.
These headwinds have steepened the drop in the employment rate for young Canadians. The employment rate for those under-35 is set to drop 3 percentage points this year relative to 2020, indicating a falling share of young people earn employment income in Canada.
Pandemic wealth gains could be at risk for young households
Young household wealth gains since 2020 came despite stagnant incomes, suggesting factors beyond earning capacity—such as pandemic government transfers, asset appreciation, and potentially family support—played a meaningful role in driving wealth accumulation.
The disconnect between income and wealth for young Canadians raises important questions about their financial security as housing and equity markets normalize and the boost from earlier government support continues to dissipate.
This matters because income has traditionally been a pathway to wealth accumulation. While income represents a flow of money, wealth requires converting that income into assets—a process that can be disrupted by increased consumption and/or stagnating income gains.
In fact, early signs of erosion are already emerging with wealth accumulation slowing in recent quarters for households under 35 more than any other age group.
That said, our forecast for a gradually improving labour market suggests further erosion isn’t a forgone conclusion. We will closely monitor younger individuals’ earnings outcomes for evidence of continued weakness.
About the Author
Rachel Battaglia is an economist at RBC, providing analysis and forecasts for consumer spending trends and provincial economies.
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