A lottery win happened yesterday, and it’ll happen tomorrow, too. Between now and 2026, an estimated $1 trillion will move from Canadian baby boomers to their heirs, mostly millennials. As older Canadians live longer, even more money will stream down in the coming decades. An Ipsos survey found that among Canadian boomers who are planning to leave 100 per cent of their estates to their children, the average inheritance will be about $940,000.
For most people, this is life-changing wealth, enough to pay off the mortgage, to move the kids from public school to private school, to shift their status from renter to homeowner. Some heirs will receive much more—the kind of Porsche-and-penthouse money that they could never earn in their jobs as teachers, accountants, marketing managers. All of this signals an unprecedented economic shift: the greatest transfer of generational wealth in Canadian history, emerging in the form of mass good fortune bestowed upon the demographically lucky. When all the payouts have been made, Canada could look starkly different. (...)
An inheritance-based economy sounds like something out of the 19th century. In many Victorian novels, inheritance is destiny, and those without it must scheme or marry (or murder!) to secure a future. Here in the new world, Canada’s 20th century was built on the dream—however fantastical for many—of mobility via meritocracy. Earning one’s destiny is the work-hard-get-ahead foundation of the middle class. But if inheritance determines who succeeds and who doesn’t, the downstream effects for Canada could be devastating. Taxes on primary residences, which are a large portion of Canadian inheritances, don’t exist here. There goes a huge chunk of money from the public purse.
We find ourselves at the precipice: as the lucky are gaining private wealth, our coffers are running low. Success via inheritance tilts the country toward individualism at a time when the collective is vulnerable. How will Canada get through? Once anathema, serious proposals to increase taxes on wealth are gaining traction, with calls for reform coming from surprising corridors. Something will have to give. If not, the great wealth transfer stands to widen the inequality gap to a gulf, where a person’s success in this country is determined not by hard work or education, but by how rich their parents were. (...)
Of course, societies have been shaped by familial inheritance for millennia. In the medieval era, landownership kept power concentrated in the nobility while their soil-tilling serfs could only rent the land they worked. Skip ahead a few hundred slightly more egalitarian years, and many sacrificial, quiet savers of the mid-century’s Silent Generation also left inheritances to their boomer kids. What’s different about today’s handover is scale: so many boomers, and so much wealth, largely bound to real estate. Over nine million boomers were born in Canada between 1946 and 1964. They became the beneficiaries of postwar prosperity at a time when jobs were handed out like Costco samples and good public schools and affordable post-secondary education were a given. “Defined benefit” pension plans—the ones that promise a regular income upon retirement—were a normal expectation, even in the private sector. And then there was the principal residence exemption: a federal policy enacted in 1972 that made principal residences exempt from capital gains tax, meaning homes would never be taxed no matter how much value they gained over time. This built, in essence, a tax shelter for homeowners that’s lasted half a century. The PRE implicitly encouraged homeownership not for the sake of having a place to live, but as a way to get rich.
In contrast, millennials spent their formative years bouncing from one global crisis to another. The oldest came of age in the shadow of 9/11. The youngest were on the cusp of adolescence when the global economy crashed in 2008. Over the course of their lives, the cost of post-secondary education, especially graduate programs, skyrocketed. Post-collegiate life began on the back foot: the average student debt at graduation is now around $30,000. Millennials face a crippling debt-to-disposable-income ratio, reaching 265 per cent in 2024. Those defined benefit pension plans that their parents enjoyed are retro now: in 1990, about 90 per cent of pension plan members in the private sector were in defined benefit plans. By 2009, the number had dropped to 56 per cent.
But the most generation-defining source of anxiety for those between 30 and 45 is housing. More millennials rent than ever before, fighting against record-low vacancy rates and record-high average monthly costs. The boomers’ tight grip on property is a key piece of our inequality crisis. As of 2019, homeowners born between 1955 and 1964 now have an average net worth of $1.4 million—seven times that of non-homeowners born during the same period. Ricardo Tranjan, a political economist with the Canadian Centre for Policy Alternatives, points to this as evidence of a new reality in Canada. “Wages don’t buy houses. Houses buy more houses,” he says. When homes are kept off the market longer, or passed down within a family the way good china used to be, there are fewer opportunities for anyone without a link to a boomer to get in. Statistics Canada reports that the likelihood of a person born in the ’90s owning a home is greater if their parents did. If your parents never owned a house, you are, for want of a better word, screwed. (...)
Sudden wealth can also isolate people from their peers. Inheritance stands to breed bitterness, striking at a sense of injustice—hostility and envy are not the building blocks of a healthy society. Some advisers told me about clients who inherited a windfall in their 40s and decided to stop working entirely. The promised ladder—work hard, move up—will get even further out of reach unless there’s a shift, a reassurance that the promise is not broken, evidenced by policies that even the playing field. It’s all a recipe for misery, personally and nationally.
This situation is decades in the making, according to Generation Squeeze, a think tank out of Vancouver that advocates for intergenerational fairness. “The wealth the boomers have is part of an intergenerational tension,” says Paul Kershaw, founder of Generation Squeeze and a professor of public policy at the University of British Columbia. “But for the quarter of Canadians who don’t have that attachment to a boomer, and for the others who are attached to a boomer who doesn’t have a lot of housing wealth, the moment the others start passing it on to their kids, it’s going to fuel intra-generational tensions.” (...)
Sometimes these gifts come with strings. An adviser described one couple who set up a trust for their kid with the promise of buying them a house upon graduation from university. The catch: it had to be in the same neighbourhood as the parents. Another set of parents is supporting their child at every stage of the property ladder. After paying for their daughter’s $75,000 wedding, they’ve purchased a condo for the couple, with plans to upgrade them to a house in the ritzy neighbourhood of Kitsilano in Vancouver once they have a few kids. (The younger couple, it should be noted, are doctors.)
I’ve wondered about the disconnect between the mind-blowing housing prices in my downtown Toronto neighbourhood of Trinity Bellwoods and these hip millennials moving in with spiritually fulfilling but low-paying creative-class careers. I’ve watched, over the past decade, as Teslas and Jaguar SUVs have crept onto our block, which, when we arrived in the early 2000s (lucky, lucky), was known for sex workers and karaoke-bar shootings. I observe—snoopily—these millennials setting up in $2-million houses and I wonder: how can an illustrator and novelist possibly afford that three-storey Edwardian? A potter is undertaking that solarium reno?
I call this status fog: how hard it is to know where anyone stands financially, or to recognize what real achievement looks like, when invisible wealth is altering one’s place in society. The markers of a comfortable middle-class life—being able to afford a family vacation or buy a home—appear to exist, but do they actually? It sounds like a tree-falls-in-the-forest-type koan: if the family lounging poolside on their vacay couldn’t pay to be there themselves, is there even a middle class?
I spoke to a woman I’ll call Jane, who is 40 and lives in a family-friendly, pricey central Toronto neighbourhood with her school-age kid and husband. Her family rent an apartment, and homeownership isn’t in the cards for them. All around her, she sees parents financially boosting their kids. “It’s not a transfer,” she says. “It’s a trickle.” She’s noticed that, on playgrounds and at the office, most people aren’t overt about the parental subsidies that are floating their lifestyles, but some do talk, if in hushed tones. Down payments. Daycare. Summer camp. Family vacations. Parents are footing the bill. A friend of hers lost her grandparents recently and, soon after, made a down payment on her first house. Everyone is going to “the cottage,” but everyone knows what that means. “No one actually owns a cottage. It’s Mom and Dad’s cottage,” says Jane. “You go into nice neighbourhoods, and it’s like, ‘Sorry, what do you do? How do you own this house?’ And then slowly it comes out: ‘Oh, you’re the son or daughter of... right. Okay. Yeah, that makes a little bit more sense.’ ”
by Katrina Onstad, Macleans | Read more:
An inheritance-based economy sounds like something out of the 19th century. In many Victorian novels, inheritance is destiny, and those without it must scheme or marry (or murder!) to secure a future. Here in the new world, Canada’s 20th century was built on the dream—however fantastical for many—of mobility via meritocracy. Earning one’s destiny is the work-hard-get-ahead foundation of the middle class. But if inheritance determines who succeeds and who doesn’t, the downstream effects for Canada could be devastating. Taxes on primary residences, which are a large portion of Canadian inheritances, don’t exist here. There goes a huge chunk of money from the public purse.
We find ourselves at the precipice: as the lucky are gaining private wealth, our coffers are running low. Success via inheritance tilts the country toward individualism at a time when the collective is vulnerable. How will Canada get through? Once anathema, serious proposals to increase taxes on wealth are gaining traction, with calls for reform coming from surprising corridors. Something will have to give. If not, the great wealth transfer stands to widen the inequality gap to a gulf, where a person’s success in this country is determined not by hard work or education, but by how rich their parents were. (...)
Of course, societies have been shaped by familial inheritance for millennia. In the medieval era, landownership kept power concentrated in the nobility while their soil-tilling serfs could only rent the land they worked. Skip ahead a few hundred slightly more egalitarian years, and many sacrificial, quiet savers of the mid-century’s Silent Generation also left inheritances to their boomer kids. What’s different about today’s handover is scale: so many boomers, and so much wealth, largely bound to real estate. Over nine million boomers were born in Canada between 1946 and 1964. They became the beneficiaries of postwar prosperity at a time when jobs were handed out like Costco samples and good public schools and affordable post-secondary education were a given. “Defined benefit” pension plans—the ones that promise a regular income upon retirement—were a normal expectation, even in the private sector. And then there was the principal residence exemption: a federal policy enacted in 1972 that made principal residences exempt from capital gains tax, meaning homes would never be taxed no matter how much value they gained over time. This built, in essence, a tax shelter for homeowners that’s lasted half a century. The PRE implicitly encouraged homeownership not for the sake of having a place to live, but as a way to get rich.
In contrast, millennials spent their formative years bouncing from one global crisis to another. The oldest came of age in the shadow of 9/11. The youngest were on the cusp of adolescence when the global economy crashed in 2008. Over the course of their lives, the cost of post-secondary education, especially graduate programs, skyrocketed. Post-collegiate life began on the back foot: the average student debt at graduation is now around $30,000. Millennials face a crippling debt-to-disposable-income ratio, reaching 265 per cent in 2024. Those defined benefit pension plans that their parents enjoyed are retro now: in 1990, about 90 per cent of pension plan members in the private sector were in defined benefit plans. By 2009, the number had dropped to 56 per cent.
But the most generation-defining source of anxiety for those between 30 and 45 is housing. More millennials rent than ever before, fighting against record-low vacancy rates and record-high average monthly costs. The boomers’ tight grip on property is a key piece of our inequality crisis. As of 2019, homeowners born between 1955 and 1964 now have an average net worth of $1.4 million—seven times that of non-homeowners born during the same period. Ricardo Tranjan, a political economist with the Canadian Centre for Policy Alternatives, points to this as evidence of a new reality in Canada. “Wages don’t buy houses. Houses buy more houses,” he says. When homes are kept off the market longer, or passed down within a family the way good china used to be, there are fewer opportunities for anyone without a link to a boomer to get in. Statistics Canada reports that the likelihood of a person born in the ’90s owning a home is greater if their parents did. If your parents never owned a house, you are, for want of a better word, screwed. (...)
Sudden wealth can also isolate people from their peers. Inheritance stands to breed bitterness, striking at a sense of injustice—hostility and envy are not the building blocks of a healthy society. Some advisers told me about clients who inherited a windfall in their 40s and decided to stop working entirely. The promised ladder—work hard, move up—will get even further out of reach unless there’s a shift, a reassurance that the promise is not broken, evidenced by policies that even the playing field. It’s all a recipe for misery, personally and nationally.
This situation is decades in the making, according to Generation Squeeze, a think tank out of Vancouver that advocates for intergenerational fairness. “The wealth the boomers have is part of an intergenerational tension,” says Paul Kershaw, founder of Generation Squeeze and a professor of public policy at the University of British Columbia. “But for the quarter of Canadians who don’t have that attachment to a boomer, and for the others who are attached to a boomer who doesn’t have a lot of housing wealth, the moment the others start passing it on to their kids, it’s going to fuel intra-generational tensions.” (...)
Sometimes these gifts come with strings. An adviser described one couple who set up a trust for their kid with the promise of buying them a house upon graduation from university. The catch: it had to be in the same neighbourhood as the parents. Another set of parents is supporting their child at every stage of the property ladder. After paying for their daughter’s $75,000 wedding, they’ve purchased a condo for the couple, with plans to upgrade them to a house in the ritzy neighbourhood of Kitsilano in Vancouver once they have a few kids. (The younger couple, it should be noted, are doctors.)
I’ve wondered about the disconnect between the mind-blowing housing prices in my downtown Toronto neighbourhood of Trinity Bellwoods and these hip millennials moving in with spiritually fulfilling but low-paying creative-class careers. I’ve watched, over the past decade, as Teslas and Jaguar SUVs have crept onto our block, which, when we arrived in the early 2000s (lucky, lucky), was known for sex workers and karaoke-bar shootings. I observe—snoopily—these millennials setting up in $2-million houses and I wonder: how can an illustrator and novelist possibly afford that three-storey Edwardian? A potter is undertaking that solarium reno?
I call this status fog: how hard it is to know where anyone stands financially, or to recognize what real achievement looks like, when invisible wealth is altering one’s place in society. The markers of a comfortable middle-class life—being able to afford a family vacation or buy a home—appear to exist, but do they actually? It sounds like a tree-falls-in-the-forest-type koan: if the family lounging poolside on their vacay couldn’t pay to be there themselves, is there even a middle class?
I spoke to a woman I’ll call Jane, who is 40 and lives in a family-friendly, pricey central Toronto neighbourhood with her school-age kid and husband. Her family rent an apartment, and homeownership isn’t in the cards for them. All around her, she sees parents financially boosting their kids. “It’s not a transfer,” she says. “It’s a trickle.” She’s noticed that, on playgrounds and at the office, most people aren’t overt about the parental subsidies that are floating their lifestyles, but some do talk, if in hushed tones. Down payments. Daycare. Summer camp. Family vacations. Parents are footing the bill. A friend of hers lost her grandparents recently and, soon after, made a down payment on her first house. Everyone is going to “the cottage,” but everyone knows what that means. “No one actually owns a cottage. It’s Mom and Dad’s cottage,” says Jane. “You go into nice neighbourhoods, and it’s like, ‘Sorry, what do you do? How do you own this house?’ And then slowly it comes out: ‘Oh, you’re the son or daughter of... right. Okay. Yeah, that makes a little bit more sense.’ ”
by Katrina Onstad, Macleans | Read more:
Image: Justin Poulsen
[ed. About Canada but pretty sure this applies to the US too, if not more so. I'm not so sure the various points are as straightforward as implied but the basic premise seems about right (at the moment). However, older generations (Boomers) are living longer, healthcare and related costs (assisted living facilities, long-term care in general) are only increasing, and who knows how the current record-breaking stock market, rapacious corporate greed, AI and climate change will affect large segments of the population (and their bank accounts) going forward. What could seem like a potential "jackpot" might not actually materialize until younger generations are themselves quite advanced in age, and it seems like a bad strategy to squander ones life waiting and expecting something that might not actually materialize to the degree one hopes for. Guess we'll see.]
