Canada is “flirting with intergenerational inequity” while the inaccessibility of real estate is reducing the savings power of young people, worries the president and CEO of Desjardins Group, Guy Cormier.
“We are flirting with intergenerational inequity, he warns in an interview on Thursday. We’re not quite there, but if we’re not careful…”
Desjardins Group has published a series of three studies that paint a portrait of the economic and social challenges facing young people under the age of 34 in anticipation of a rally organized by the cooperative in Montreal on June 19 and 20.
The cost of living forces young people to postpone certain pivotal moments in the transition to adulthood, adds Desjardins Group chief economist Jimmy Jean. “Today’s youth may be doing all the right things: getting a degree, entering the workforce, working hard, building their careers. Despite this, it’s difficult to make the transitions to the big steps, whether it’s forming a couple, buying a property, having children. »
Yet time is “the key” in building wealth and planning for retirement, Cormier points out. “It’s not about portfolio yield or real estate appreciation. If you’re 10 years short of a 40-50 year period, that’s ten less years you have to grow (your assets). »
Housing affordability has particularly deteriorated across Canada during the pandemic and the slight improvement in recent quarters is not enough, adds Mr. Jean. Ways will have to be found to stimulate supply, i.e. the construction of new housing.
“We need affordable housing, but also places where young people are going to want to stay for a long time, not just condos. This is a solution that is not always suitable in the long term. »
Light to this dark picture, many young people will enjoy an unprecedented transfer of wealth while their parents are richer than previous generations. In 2019, Canadians aged 65 and older had a collective wealth of $3.6 trillion, according to Statistics Canada. That’s more than triple in constant dollars than 20 years ago, still for people 65 and over at the time.
Not everyone will be able to benefit from this parental legacy. In addition to the less well-off, the economist gives the example of young immigrants who must financially support family members abroad. “There are issues of inequality that need to be addressed. »
The inaccessibility of real estate is not the only reason that influences the decision to start a family or not. Many are questioning their desire to bring a child into the world in a context where climate change makes them pessimistic about the future of the planet.
One in five Canadians (21%) say they are having fewer children or have given up starting a family due to concerns about climate change. Mr. Cormier acknowledges that population decline can help reduce greenhouse gas emissions, but this trend could bring other long-term challenges.
“It can have other consequences elsewhere on our ability to afford the education and health network we want. I’m not saying that for 2025. I’m thinking 2040, 2050.”
It would be wrong to blame young people for the challenges they face in their transition to adulthood, adds Mr. Jean. He takes the example of the famous “lawyer toast” used to discredit young people’s financial concerns.
“Young Canadians and Quebecers are outperforming in financial literacy. […] It is not true that young people go crazy. When you look at the time it takes to accumulate a down payment compared to 20 or 25 years, it’s a lot longer regardless of whether they decide to be frugal or not. »