As a card-carrying member of Gen X, I grew up at a time when life was affordable in Canada. No matter where you were on the socio-economic spectrum the basic necessities of food and shelter were attainable even if you just made minimum wage. If you needed transportation, you could always find a beat-up old car for a nominal price and if you aspired to be a homeowner that too was affordable.
For perspective, my first apartment in London, Ontario, was $250 per month for a bachelor apartment in a clean high rise in Cherry Hill, not too far from the university. At the time I was making somewhere around $8 and hour as a part-time teller at Canada Trust while attending Western. Even if I only worked 10 hours a week, I could pay the rent. Try doing that today.
In the early nineties I was able to buy my first home. Nothing fancy but it was a 3-bedroom bungalow, with a big yard and a pool, in Milton, Ontario for about $165,000. CMHC had just launched their 5% down program and we managed to buy the house on an entry level bankers’ salary and a waitress earning mostly tips. It was a stretch, but I don’t remember ever feeling like life wasn’t affordable.
Compare that to today…
I recently spoke with an old client that I helped about a decade ago. At the time he was finalizing a divorce, had two kids, and was trying to keep the matrimonial home. He was similar in age to me and had lived a similar middle class Gen X lifestyle. We managed to consolidate his debt and buyout his former spouse from the matrimonial home. All was good.
Fast forward to my recent conversation with him and he is struggling to keep up. He has worked in the public sector for over 20 years making good money. Call it $150,000 per year for a round number. He has lived in the same suburban house for over 20 years, and both his kids are finishing university. In a few more years he will be eligible for his defined benefit pension plan. (All details altered slightly to maintain confidentiality.)
It sounds like he is living the dream, but he is struggling to keep up financially. In fact, he is barely treading water. We had to refinance his mortgage to pay out all his unsecured debt to make his overall monthly payments affordable again. After a decade of paying his mortgage, his new mortgage is greater than what it was a decade ago and about three times bigger than the original purchase price of the home.
On paper he has everything an upper middle-class lifestyle in Canada could hope for. A secure job with a solid income and excellent benefits, a nice suburban home, and a defined benefit pension waiting for his retirement. He has it all, yet even he is struggling to stay afloat.
One thing I have noticed amongst my peer group is that those that have gone through a matrimonial breakdown are more often than not struggling. A single income just isn’t enough to live comfortably in Canada anymore.
When even Gen X is struggling how do the younger generations have a chance? We had the benefit of an affordable start, anyone starting out today can’t even get a foothold.