What will wealth look like in 2045?
Five financial experts predict what the future holds for young Canadians and their finances
For years, millennials and Gen Zs have heard about how hard their financial lives are compared with older generations, and for good reason. It is tougher for them to buy property than it was for their parents, and they have fewer emergency savings. Millennials lived through the dot-com boom and bust, and the financial crisis of 2008, and everyone is still feeling the pinch from the pandemic-related after-effects of 2020. Gen Z is especially vulnerable. The Nanos Pocketbook Index, which tracks how Canadians feel about personal finance and job security, dropped to its lowest level since April, 2020 for those aged 18 to 29. Student debt is the highest it’s ever been, and the rise of the gig economy has opened up new types of jobs dominated by people under 45 - but these jobs are unstable, they are unprotected and they lack benefits or pensions.
There is some good news on the horizon: An unprecedented wealth transfer is under way for a certain cohort of millennials with boomer parents who are cashing out their mortgage-free homes, selling off assets and eventually — even though people are living longer — passing the entirety of their wealth to their children. Reportedly $1-trillion will be transferred from boomers to their heirs by 2026.
For first-generation children of immigrants, however, the wealth transfer may be less of a sure thing. In many cultures, adult children are expected (and want) to help contribute financially to their parents’ retirement years. First-gen Canadians make up 26.4 per cent of the population, and according to a 2021 Census mapper from Statistics Canada, more than half of the immigrants who settled in Canada between 2016-17 and 2020-21 were millennials.
This mix of financial futures makes forecasting what’s in store for Canadians complex: It requires a combination of insider knowledge mixed with market uncertainty and a bit of financial wizardry. We asked five financial advisors what the future of wealth could look like for Canadian millennials and Gen Zs — and thankfully it’s not as doom and gloom as you might think.
Our experts
Shiraz Ahmed
Senior financial advisor and founder of Sartorial Wealth of Raymond James in Mississauga.
Wealth will be defined by choices, not material things
Wealth is going to be less concentrated on material objects, with more emphasis on having meaningful experiences that are personalized to your unique tastes. When home ownership is off the table, millennials and Gen Zs will find new ways to display status. Things like bespoke health and wellness treatments or bespoke travel over flashy, expensive possessions. “When we talk about home ownership, there’s a big hit of dopamine and then reality sets in, ‘Oh wow, this is stressful, there’s bills, upkeep, etc,’” says Mr. Dyck. “But when you make a memory, that dopamine lasts longer and you can draw on that from time to time. [With that in mind] international travel used to be the big topic with my clients, but now it’s more travel within Canada.” Potentially influenced by the COVID-19 pandemic, “they don’t want to travel as far and they’re willing to save up for a unique experience,” he adds. “In the future, people will be looking for vacations that will make memories that last rather than a quick dopamine hit.”
Gen Zs and millennials might still see value in some of the same indicators of wealth as previous generations. As Ms. Sykes notes, having a paid mortgage is still going to be a goal for young Canadians, specifically because it’s harder to achieve now than in decades past. But she says she believes wealth will be defined as the ability to choose how — and where — you spend your time. “I think the biggest indicator [of wealth] will be having the choice to work or not,” Ms. Sykes says. “People are working longer, but they’re also loving their work and wanting to work longer. Having that choice will be huge.”
Retirement will diverge into two options: early retirement or none at all
One of the great divides between individuals might be when it comes to retirement. According to Ms. Mander, we’ll see more millennials and Gen Zs leveraging the power of the stock market as a wealth-building tool for retirement, “I think a higher proportion of them will achieve FIRE (Financial Independence, Retire Early) or coast fire (where they’ve front-loaded their investment portfolios to a point they don’t need to contribute further and can “coast” to retirement), and will aim to retire earlier than 65.”
The goal for millennials and Gen Zs will be to achieve a level of financial independence where work is a choice, not a necessity to make ends meet, as opposed to fully embracing retirement. “My clients want to get to financial independence, just to the point where, if anything happens, they have savings,” Mr. Dyck says. “They don’t want to be forced to work. They want the freedom to do what they want.” Part of this shift, he adds, could be influenced by what they’ve seen in their own family units. “Millennials are getting a first-hand look at the (retirement) experience through their parents and seeing that there isn’t necessarily as much happiness or fulfillment from retirement.”
Of course, like today, early retirement or financial independence won’t be an option for everyone — many will continue to work past retirement age, and not necessarily by choice. This is especially true for first-generation millennials with immigrant parents, who may have less money down the road for themselves or to put toward retiring early. “Traditional western culture talks about retirement for yourself, where for a lot of my clients it comes down to: ‘Hey, I’m my parents’ retirement plan as well. How do I save for myself and them?’” Ms. Mander says. While she does see clients who have accumulated wealth through the real-estate market by being in Canada for a longer period of time, “for many, there will be no wealth transfer.”
Gen Z will have savvier investments than their predecessors did at the same stage
Unlike previous generations, Gen Z Canadians are hungry to know as much as they can about what will set them up best financially from the start.
“[Gen Z] are investing at a younger age, but a lot of their investments are influenced by trends like crypto,” says Ms. Adams. According to a 2023 survey by the CFA Institute, 74 per cent of Canadian Gen Zs between the ages of 18 to 25 reported owning at least one investment, with 24 per cent of Gen Z investors doing so before the age of 18. This compares with only 12 per cent of millennials at the time, and 9 per cent of Gen X investors. It’s a disparity that has a lot to do with the increase in financial information on social media and Gen Zs familiarity with investment trends because of that influx of not-always-correct information. But it’s not all wrong. “Gen Z is better at not accruing debt as well as paying it off, more interested in having good credit and setting themselves up [financially],” Ms. Adams says.
This includes choosing to invest in unique ways. While generations before had precious art and sports cars, the next specialty investment category might surprise you: collectibles. “People are collecting Scotch as an example; they’ll create a portfolio of that, they’re going to buy and hold that,” Ms. Adams says. “What’s happening is folks are saying, ‘I’m going to do my own research, be my own investment advisor and I’m going to control at least this portion of my portfolio.’” Also popular are Lego and Pokémon. “It’s really interesting to hear how specialized their knowledge can be and that knowledge can translate to money.”
Inheritance will become less reliable
While there’s a lot of chatter about the great wealth transfer being the saving grace for millennials who have otherwise been unable to get into the housing market or grow significant wealth, the future is a lot more complicated than that for Gen Z. With Boomers living longer, needing more money with the increased cost of living, and leaving less of their savings behind, the so-called ‘Bank of Mom and Dad’ isn’t a guarantee for everyone. At this point, “the older you are, the softer the landing because we were the last sub-generation that was able to get into real-estate fixed assets,” says Mr. Ahmed. Gen Z recognizes this disparity, and it’s going to push back against it. “What I do think the younger generation will do is they’re not going to settle for things the way they are,” Mr. Ahmed says. “Not only are they unhappy, they’re also very vocal. We’re already seeing young people pushing back hard on many issues and changing the game. They don’t have the money, but they have the numbers.”