Younger workers heavily concentrated in retail, accommodation and food services, which are more vulnerable to economic shocks and labour market volatility
Young Canadians’ wealth has risen faster than any other age group since 2020, but stagnant incomes are putting those gains at risk, according to a recent report.
Households under age 35 have “nearly doubled their net wealth over the last four years,” driven largely by gains in financial assets and real estate, says Rachel Battaglia, an economist at RBC.
At the same time, they have recorded “the slowest income growth of any age group,” making them the only cohort whose disposable income growth has failed to keep pace with inflation, she said.
More than half of Generation Z Canadians feel compelled to project an image of financial stability, despite facing rising living costs and low income, according to a previous report.
What is driving young Canadians’ wealth growth?
RBC attributes much of the net worth growth to a combination of pandemic-era supports, asset appreciation and shifts in borrowing patterns. Government programs such as CERB and other transfers provided “significant cash flows to young households, allowing them to build financial reserves,” Battaglia notes. Stock market appreciation and generational wealth transfers likely added to those gains, according to the report.
Property has been another key driver. Young households’ wealth has been boosted by “sizable growth in the value of their properties,” with some under‑35 homeowners benefiting from rapid house price inflation during and after the pandemic. Those who bought or refinanced in 2020 and 2021 “benefitted from low borrowing costs, which enabled faster debt repayment,” Battaglia states.
At the same time, liabilities among young households have declined, primarily due to lower average mortgage debt. RBC links this partly to reduced home‑buying activity as affordability worsens. Some young Canadians have postponed or abandoned plans to purchase property, avoiding new mortgage exposure while existing owners continue to hold properties purchased at much lower interest rates, according to the report.
The trend is evident in Ontario, where the average age of first‑time homebuyers rose from 38 to 40 between 2019 and 2024, according to the report. This shift underscores a growing divide between younger Canadians who entered the housing market during the low‑rate period and those who remain renters facing higher costs.
Disposable income deteriorates
Despite these wealth gains, the income side has deteriorated for younger households. Disposable income for those under 35 has risen only 18 per cent since the first quarter of 2020, RBC reports — 16 percentage points below the growth rate for households aged 45 to 55 and 8 percentage points under the national average. RBC concludes that this makes under‑35s “the only group where income growth has failed to keep pace with inflation.”
RBC identifies “sluggish employment compensation growth—the primary source of income for households under 35” as the main reason for weak disposable income performance. The report notes that younger workers remain heavily concentrated in industries such as retail, accommodation and food services, which are more vulnerable to economic shocks and labour market volatility.
These conditions have contributed to a sharper decline in the employment rate among young Canadians than in other age groups. “The employment rate for those under‑35 is set to drop 3 percentage points this year relative to 2020,” says Battaglia, indicating a smaller share of young people are earning employment income. The report also notes that younger Canadians “have also taken longer to find work,” reinforcing labour market challenges for this cohort.
Net savings declined for Canadian households across all income groups in the second quarter of 2025, marking the first time this has occurred since inflation peaked in 2022, according to new data from Statistics Canada (StatCan).
'Early signs of erosion' with net worth
RBC warns that the apparent disconnect between surging wealth and weak income growth raises questions about the durability of young Canadians’ financial position. Wealth accumulation since 2020 “came despite stagnant incomes,” relying heavily on “pandemic government transfers, asset appreciation, and potentially family support,” the report says.
RBC cautions that as housing and equity markets normalise and the impact of earlier government support fades, the risk of erosion in young households’ net worth will grow. “Early signs of erosion are already emerging,” the report notes, with wealth accumulation slowing more noticeably for under‑35s than for other age groups in recent quarters.
The bank points out that income has “traditionally been a pathway to wealth accumulation,” because households need to convert the flow of earnings into assets over time. Stagnant incomes and higher consumption pressures could disrupt that process for young Canadians.
Even so, RBC’s outlook is not entirely negative. Battaglia forecasts “a gradually improving labour market” and argues that “further erosion isn’t a forgone conclusion.” She says RBC will continue to monitor younger Canadians’ earnings for “evidence of continued weakness” in the years ahead.
