Young Canadians have spent the past few years living through a strange kind of financial split-screen. On paper, they look wealthier than ever. But in their day-to-day lives, many are feeling squeezed, stuck, or left behind. And according to RBC economist Rachel Battaglia, that tension isn’t imagined1 — it’s real.
Over the last four years, Canadians under 35 have seen their net worth almost double. Yet Battaglia points out the catch right away: “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.” So while assets have ballooned, paycheques haven't kept pace — and that gap is becoming a real problem for long-term financial health.
Wealth is rising — but the ‘why’ matters
A huge chunk of these gains came from assets, not earnings. Battaglia highlights increases in “financial assets, including cash deposits, and sizable growth in the value of their properties.” Several tailwinds pushed young households ahead:
- Government support programs like CERB injected meaningful cash at a time when spending was limited. As Battaglia notes, “Pandemic-era government support (like CERB) provided significant cash flows to young households, allowing them to build financial reserves.”
- Asset markets were roaring. Stocks recovered quickly, and home values surged.
- Family help played a part too. Battaglia adds that “stock market appreciation and generational wealth transfers also likely contributed to these gains.”
So yes — net worth climbed. But it climbed because of extraordinary, one-off boosts, not because incomes were strengthening.
Debt went down — but not for the reasons you might think
Younger households also saw their debt loads shrink. Some benefited from refinancing during the 2020–2021 low-rate window. As Battaglia explains, “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 the deeper reason is more concerning: fewer young Canadians can buy homes at all.
Battaglia captures it clearly: “Mortgage exposure has also been declining for young households, reflecting reduced home buying activity.” With affordability stretched, many young adults are renting indefinitely or waiting longer to enter the market — which is why Ontario’s average first-time buyer age has climbed from 38 to 40.
In short: less mortgage debt doesn’t always mean healthier finances. Sometimes it just means people were locked out.
The real trouble: income isn’t keeping up
While wealth rose, income barely moved. Battaglia shows just how stark the gap has become: “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.”
And because inflation outran those earnings, real income for under-35s actually fell.
Why? Their jobs are more vulnerable. Battaglia notes that weak compensation growth is the “primary driver for weak disposable income growth.” Younger workers are concentrated in sectors exposed to economic shocks — retail, hotels, restaurants, and other service-based roles. On top of that, “The employment rate for those under-35 is set to drop 3 percentage points this year relative to 2020,” meaning fewer young adults are earning employment income at all.
This is not a small wobble — it’s a structural stress point.
Wealth without income is a shaky foundation
Here’s the heart of the issue: young Canadians built wealth during a period when income mattered less than cash transfers, asset prices, and family support. That’s unusual, and it’s not something they can count on again.
Battaglia flags the risk directly: “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.”
Already, the momentum is slowing. She warns that “early signs of erosion are already emerging with wealth accumulation slowing in recent quarters for households under 35 more than any other age group.”
If markets cool or job conditions weaken further, these gains could quickly unravel.
There is one bright spot — but it’s not guaranteed
RBC expects the labour market to gradually improve. Battaglia leaves room for optimism: “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.”
If wages firm up and employment steadies, the wealth this generation built could become more than a lucky streak. It could become a real foundation.
What advisors need to take away
For advisors working with younger clients, this research reveals several important realities:
• Strong-looking balance sheets can mask fragile income situations Pandemic windfalls and asset inflation boosted wealth, but didn’t fix cash flow.
• Cash-flow planning has to take precedence When income lags inflation, everything — savings, debt repayment, goals — becomes harder.
• Housing plans need a reset Many young Canadians are non-owners not by choice, but by affordability constraints.
• Intergenerational wealth is becoming a much bigger driver Battaglia’s mention of transfers isn’t incidental — it’s part of the new financial landscape.
• Expect slower wealth growth going forward The pandemic-era tailwinds aren’t returning.
A generation at a crossroads
Young Canadians’ wealth surge since 2020 is real — but it’s also precarious. The next few years will determine whether they can build on it or whether those gains drift away.
As Battaglia puts it plainly, the path forward depends heavily on “improving labour market conditions” and whether younger Canadians can regain reliable, growing incomes.
For advisors, this is the moment to step in with clearer planning, a steadier hand, and a deeper understanding of the gap between how young clients look on paper — and how secure they actually feel.
Footnote:
1 Rachel Battaglia, RBC Economics. "Stagnating income threaten wealth gains for young Canadians." RBC Economics, 26 Nov. 2025.
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