Do millennials have it harder than Gen Xers did?

Statistics Canada’s comparison of income, wealth, and debt shows a not-so-straightforward story

Do millennials have it harder than Gen Xers did?

Statistics Canada has released a new study comparing the financial outcomes for millennials today with those of Gen Xers back when they were at the same age.

The study found that millennials had higher household incomes in 2016 than Gen-Xers did 20 years ago. While millennials aged 25 to 34 had household incomes reaching $66,500 three years ago, Gen Xers’ household incomes were just $51,000 when they were within the same age range in 1999.

That higher income was attributed to the fact that millennials have pursued post-secondary studies over the last decade, giving them an edge in the labour market and making them the most educated generation. To get an idea of how that higher income contributed to saving and wealth accumulation, Statistics Canada looked at the median net worth — the median value of total household assets minus total debts — for both groups.

Among millennials, median asset values were around $154,000, while median debt was just over $35,000. For Gen Xers at the same age, median assets were $76,708 and median debt just topped $19,000. But by the agency’s calculations, the median net worth for Canadians was $70,600, over 50% more than the $42,800 for members of Generation X at the same age.

But that’s not where the generational head-to-head ends. “Although millennials were better off than young Gen-Xers in terms of assets or median wealth, they were relatively more indebted, as they carried considerably more mortgage debt,” Statistics Canada said.

Looking at debt-to-income ratios, the agency found that the ratio reached 216% among millennials, easily exceeding the 125% that Gen Xers faced at the same age. The figure was even lower for Baby Boomers, whose debt-to-income ratio was reportedly just 80% at the same point in their lives.

“Even during a sustained period of home price inflation, millennials continued to enter the housing market at the same pace as previous generations,” the study noted. It found that among millennials aged 30 to 34, the typical age at which households enter the housing market, some 51% had invested in a home or had a principal residence as part of their asset portfolio, which is in line with the rates for young Gen Xers (51%) and young boomers (55%).

While their homeownership rates were similar, the different generations varied in the amount of mortgage debt they took on. The agency found a median mortgage debt of $218,000 among millennials aged 30 to 34, which was over 2.5 times their median after-tax income of $83,200. In contrast, the mortgage debt for young boomers ($67,800) was found to be equivalent to their after-tax income.

“Similar patterns were observed for principal residence asset values across young generations, which were considerably higher for millennials than for young Gen-Xers and for young boomers,” Statistics Canada said.

The study also found that wealth levels varied more widely across various groups of millennials compared to the variation among young Gen Xers. Among millennials, the bottom 25% and top 25% in terms of wealth showed a net worth of $9,500 and $253,900, respectively. In comparison, the bottom and top quartiles among young Gen Xers had net worth figures of $6,200 and $126,900, respectively.

“Millennials in the top 10% had accumulated $588,600 in net worth and even more, they held 55% of the total wealth for their generation,” the study said, adding that those who invested in the housing market were considerably better off. Millennial homeowners aged 30 to 34 had a median wealth of $261,900, as opposed to $18,400 for those who did not invest in housing.


Follow WP on Facebook, LinkedIn and Twitter