The Jackpot Generation
September 13, 2024 at 11:33PMIn Canada, Millennials, for the most part, are the first generation that doesn’t expect to achieve intergenerational mobility—when kids do better financially than their parents. Housing prices have increased. Inflation is up. Interest rates remain high and wages have not kept pace. It’s hard to find a place to rent; the dream of owning a home has become a figment of the imagination. This is the case for many, but a segment of this population stands to get a huge leg up as aging Boomers begin to bequeath their assets to their heirs to the tune $1 trillion over the next several years. Katrina Onstad reports on what the coming wealth windfall could mean for Canada.
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.
from Longreads https://longreads.com/2024/09/13/the-jackpot-generation/
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