Future Lives: Uncertainty

3.1 Game changer 1: Nuclear family households could become less economically viable for more people

In this future, the idea of the nuclear family has become less economically viable. Wages are stagnating, debts are growing, and the cost of living is rising. In the past, one person earning a ‘family wage’ could support the needs of a typical family.^Footnote2 This has become less realistic for many people. As a result, various new household arrangements have emerged. Many involve multiple sources of income.

Forces of change supporting this game changer

Housing has become less affordable, for both homeowners and renters. Housing prices increased more than twice as fast as incomes between 1975 and 2021. Since 2005, they have increased nearly 3 times as fast.^Footnote3 Many people cannot imagine ever owning their own home. Average rents in Canada’s 20 largest cities increased by 24% between 1992 and 2022, after adjusting for inflation.^Footnote4 Housing is seen as ‘affordable’ when a minimum wage worker can rent a one-bedroom home for less than 30% of their pre-tax income. This is not true in any province of Canada.^Footnote5

Wages are not keeping pace with the increasing cost of living. Consumer prices are rising faster than average wages. This means that people in Canada are seeing their purchasing power decline. Between 1992 and 2021, the consumer price index increased by 62%^Footnote6 but median income rose by only 32%.^Footnote7 The gap in net worth between the richest and poorest households is also widening.^Footnote8

Canadian households have the highest debt of any country in the G7. Three-quarters of this debt is mortgages.^Footnote9 This means people have less income to spend on goods or invest in savings to protect against the risk of a job loss.

3.2 Game changer 2: Shifting socio-cultural values may challenge traditional expectations around families and household formations

People’s values are shifting when it comes to romantic relationships, parenting, and cohabitation. This has set the scene for more diverse life pathways and household types. More people in Canada are forming relationships and families in novel ways. Some choose to remain single or live alone.

Forces of change supporting this game changer

People in Canada are increasingly likely to be single and live alone at every stage of life.^Footnote10 Single-person households are the largest household type in Canada. They make up 29% of all residences. However, not all single-person households are economically independent. Many young adults who live alone receive financial support from their parents. Independence and autonomy are often considered markers of success and maturity. In future, a growing number of people may not be able to attain them.

Canada has increasing cultural diversity. This is contributing to more diverse household arrangements. For example, newcomers to Canada and Indigenous peoples are more likely to live in households with multiple generations under one roof. They are more likely to live in the family home further into adulthood.^Footnote11 By 2041, newcomers may comprise up to 34% of Canada’s population. This could make family and household norms even more diverse.^Footnote12

Social values around monogamy are changing. Polyamory, open relationships, and ethical non-monogamy are becoming more common. There is less stigma around these life choices. Up to 7% of people in North America engage in consensual non-monogamy.^Footnote13 Popular dating apps now offer the option of filtering for non-monogamous users.^Footnote14 Some courts in Canada have recognised that polyamorous relationships can be loving and stable environments for raising children.^Footnote15

More people in Canada are becoming parents without cohabiting. This includes single parents, and co-parents who are not a couple. Single-parent families are becoming more common. Some people become single parents because they separate from their partner. Others choose to be single parents. Most are single mothers, though the number of single fathers has grown since 2011.^Footnote16 Some parents share responsibility for their children without being in a romantic relationship.^Footnote17 Others live separately^Footnote18 but still pool resources.^Footnote19

3.3 Game changer 3: Cohabitation between unrelated individuals might become more common across different stages of the life course

In the past, people typically lived with non-relatives after growing up with parents and before moving in with a life partner. However, this pattern is evolving. Increasingly, people are living with non-relatives for the long term. This can be for economic or social reasons.

Forces of change supporting this game changer

Homeownership is the typical way people in Canada build wealth. For many young people, it is out of reach. The average age of a first-time homebuyer increased from 29 in 2013^Footnote20 to 36 in 2020.^Footnote21 Young people increasingly need family wealth to buy a home. In 2015, 20% of first-time home buyers relied on financial contributions from family members for their downpayment. By 2021, that increased to 30%.^Footnote22 These contributions are often substantial.^Footnote23 Most young people say they believe homeownership is only for the rich, as discussed in The Future of Youth Expectations.^Footnote24

Roommate households are becoming the fastest growing household type in Canada.^Footnote25 Typically only young adults formed a household with friends or strangers. It has now become a more common way to cope with the rising cost of living and housing insecurity. For some people, living with others is the only viable financial option. This may expose them to undesirable living arrangements. In some households, roommates share only costs that cannot be individualized, such as rent or mortgage and utilities. Others pool their financial resources in shared accounts, like a family.

More people are choosing to rent or buy homes with friends. As well as saving money, they enjoy the social support.^Footnote26 People are increasingly creating chosen families with non-relatives. People in these chosen families care for and commit to each other. Cohabitation can help people meet needs such as caring for children or pets. For example, single mothers in ‘mommunes’ share childcare responsibilities. They aim to create a sense of community for their children.^Footnote27

More seniors are choosing to live communally, and not just in retirement homes.^Footnote28 This can be due to care needs or economic pressures. Some seniors, who want to age in the home they own, are using services that match them with a housemate. This could be another senior^Footnote29 or a university student.^Footnote30 Some jurisdictions have policies to make it easier for seniors to live communally, such as Ontario’s Golden Girls Act.^Footnote31

What could these changes mean?

Implications

Individuals and families may need to live together in new ways to be able to afford adequate housing. More people may plan on living with friends or roommates for the long term, rather than until they own their own home. More families could live in households with many generations. Adult children could continue to live with their parents after they have had their own children. Grandparents could take on more childcare responsibilities when they do not need to keep working.

As people choose to live together in new ways, they may need new kinds of houses. Developers currently prioritize smaller units for individuals or nuclear families.^Footnote32 Municipalities are zoned mostly for single-family homes.^Footnote33 In future, more developers may build houses suited to multigenerational family households.^Footnote34 When non-relatives live together, they may have different preferences to families. For example, they may prefer equal sized bedrooms or separate suites with their own bathrooms. This has typically been characterized as student housing.

More people living in the same household could increase demand for services and infrastructure. A denser population could put more pressure on traffic, parking, and community programs. It could also create larger markets for local businesses. Urban planners could create more zones for families to share houses. More households could retrofit their buildings. This could increase demand for tradespeople.

Economic insecurity may lead to new patterns of physical and social mobility. More people could move to areas with a lower cost of living. This could drive up prices in those locations. Employers may struggle to attract people for jobs in cities with a high cost of living. People who live alone or with roommates rather than family, may struggle more to cope with personal or financial problems. People may find it harder to move up socially when only those with family wealth can afford housing, as discussed in The Future of Youth Expectations. People may have to get into more debt if they want to live alone or in a nuclear family. Mortgages could pass down the generations. This could lead to a rethink of assumptions about lifetime financial planning^xi.

People may turn to roommates and tenants to meet their need for financial security and care. Friends who share a house could commit to support each other like romantic partners. More elderly property owners could want to rent out rooms in exchange for care. This could create problems if the homeowner wills the home to family, but the caregiver wants to continue living there.

New ways to finance new living arrangements could emerge. Governments and banks often assume that joint mortgages are held by couples. In fact, there is no limit to how many people can share ownership of a property. Real estate and mortgage firms lacking experience in helping unrelated groups of people navigate the financial and legal systems to purchase property could create challenges. New ideas for financing home purchases may emerge, such as equity sharing programs.

More economic families might become dispersed across multiple households. The idea of the ‘economic family’ refers to people who are related and who live together.^Footnote35 In the future, more family members might live separately but still be a single economic unit. Alternatively, people living together may be less likely to depend on each other financially. Household income may become a less useful metric as it may not reflect how economic resources are shared. New metrics for understanding households and their economic resources may emerge.

4.1 Game changer 1: Big data and artificial intelligence (AI) could make access to and premiums for insurance increasingly tied to personal risk factors

In this future, individuals could find it more difficult to meet their insurance needs. Power shifts to insurers. Premiums are ever more closely tied to personal risk factors. The search for and access to affordable premiums could increasingly influence important life decisions.

Forces of change supporting this game changer

Big data, AI, and predictive analytics are changing how insurers assess risk. Traditionally, insurers analyze risk using actuarial theory. This uses statistical modeling based on the normal distribution of events across a given group. Now they are moving towards trying to predict risks for given individuals. Insurers use AI-powered client segmentation^Footnote37 to determine how likely different types of clients are to make a claim. This allows for greater personalization of premiums. For example:

• Health insurers used to work out premiums by asking people questions and looking at medical records. Now they look at data from tools such as smart watches and medical devices. These provide real-time granular information on people’s choices and behaviours.
• Property insurers used to look at data at the scale of postal codes. Insurance underwriters also observed how well a house was maintained. Now insurers collect data from smart home devices and the Internet of Things.^Footnote38 This helps them assess risk in real-time.^Footnote39

Insurers can tailor premiums to customers based on their individual risk level. They can modify premiums as that risk level changes.

Information asymmetry in insurance is reversing. Individuals used to have more information than insurers about their exposure to risk. They chose what details to give insurers about their lives, habits, and assets. This worked to the advantage of consumers.^Footnote40 Now insurers can know more about customers’ risk profiles than they once did.^Footnote41

4.2 Game changer 2: Climate change may introduce new risks and exacerbate existing ones, threatening the insurability of many houses and regions

It may become too expensive to insure property against disasters in some regions of Canada. This may force people out of these areas or make living there inherently risky.

Force of change supporting this game changer

Climate change is making disasters worse and more common. This is raising insurance premiums. It is making some homes and regions uninsurable.^Footnote42 Climate disasters such as floods, wildfires, and tornados affect a growing number of homes in Canada.^Footnote43 In 2021, for instance, a tornado in Barrie, Ontario, left dozens of homes uninhabitable.^Footnote44 In some regions insurers have temporarily stopped issuing new home insurance policies. For example, this happened in the Halifax area in 2023 due to wildfires.^Footnote45 It may become effectively impossible to insure homes in some areas against certain risks. Homebuyers are not always aware of available data such as flood or wildfire maps. They may not understand the risk they are assuming when they purchase a property.^Footnote46

4.3 Game changer 3: Changes to the life course might make some insurance products less relevant and create demand for new ones

People are having fewer children later in life, have less access to home ownership than in the past, and are living longer, healthier lives.^Footnote47 This impacts the kinds of insurance that they need.

Forces of change supporting this game changer

Insurance policies embody assumptions about people’s lives. Many of these assumptions may no longer hold true. Life insurance is one example. It is typically seen as a product intended for people with one partner, children only within this union, and a mortgage. More people now live in atypical household and family structures. They may find it more challenging to understand their options to protect their loved ones in the event of their death.^Footnote48

Many renters in Canada do not have coverage for their personal property in the event of a natural disaster. Property owners’ insurance covers only the physical building, not the tenant’s possessions. Approximately 50% of renters do not have tenant insurance.^Footnote49 Those who do may not have comprehensive coverage. For example, many may not be covered for flood damage. This is typically offered as an option at an additional cost.^Footnote50

What could these changes mean?

Implications

Reduced access to insurance could make people more risk averse. This could impact the wider economy. Insurance cost and availability influences the choices that people make. When people feel protected against risk, they are more likely to make choices that could drive growth and innovation. This could be investing in new technology or starting a business. Protection can come from private insurance, public support, or a personal or family safety net. The absence of protection could stifle entrepreneurship and economic growth. It could also hold people back from pursuing personal development.

It may be more difficult for individuals to protect their privacy and autonomy. Insurers are gaining greater access to personal data. People may have to accept a degree of digital surveillance to get insurance for their health or property. The Genetic Nondiscrimination Act (2017) prevents Canadian insurers from requiring genetic testing.^Footnote51 However, insurers are getting access to more data sources to classify people, determine eligibility, and set premiums. More people may be deemed too risky to insure. This could create a divide between those who can and cannot afford to insure against health risks.

More frequent disasters and rising costs of rebuilding may put strain on public funds. The amounts provided to provinces and territories through programs like Canada’s Disaster Financial Assistance program may be insufficient for rebuilding efforts given the increasing frequency of disasters and rising building costs.^Footnote52 Individuals may have to bear more costs of repairing and rebuilding after a disaster themselves. Or they may seek help from private emergency assistance funds. Some people may have to leave areas where they cannot get a mortgage. This may lead to regions losing population or changes in their demographic makeup.

There could be an increase in ‘risk vacuums’. These are events, spaces, or people that have become too risky to insure.^Footnote53 For example, during the COVID-19 pandemic, most insurers said existing policies did not cover the pandemic interrupting business. Climate events–such as flooding and forest fires–may become less insurable as they become more predictable. As insurers gain access to increasingly granular data about people and environments, and use machine learning to detect and predict behaviour, they may insure only risks that involve a lot of randomness.

Lower access to home insurance may reshape space and housing. Decisions about what and who can be insured have shaped urban landscapes. As more homes become uninsurable, more people may turn to informal housing. This could include recreational vehicles (RVs) or tents. It could also be multi-family housing, as described in The Future of Households. Those who cannot access insurance may also lack funds to make their homes resilient to climate events. A rise in renting could lead to fewer people insuring their assets. Examples from Australia and the United Kingdom show that a rise in the rental rate increases underinsurance.^Footnote54

Homes that cannot be insured may also not be able to be mortgaged. This could reduce the wealth of people and families in Canada. Mortgage lenders require homeowners to have home insurance. The increasing cost of home insurance could leave some homeowners without insurance, putting them in breach of their mortgage conditions. They may also be unable to sell because potential buyers also cannot get a mortgage. This may lead to widespread impacts on the real estate sector and increased calls for public assistance programs.

Smaller players may enter the insurance market with new kinds of products.^Footnote55 Microinsurance is typically targeted at the poorest consumers. However, it may be expanded as more people face higher premiums from larger firms. More consumers may look for more flexible insurance, or insurance against new risks. More microinsurance firms targeting specific risks may emerge.

Firms may need different insurance to manage supply-chain risks. Supply chains are becoming more complex and vulnerable to disruption from increasingly common natural and manmade disasters. Canadian businesses may need new types of coverage.^Footnote56 Short term gaps in coverage could increase risks. In the longer term, insurance costs for businesses may rise as different kinds of coverage are required. This could ultimately drive up costs for consumers.

More insurance claims from natural disasters could challenge the functioning of the global reinsurance market. Domestic insurers are at risk of collapse if a local disaster causes many claims. They use the global reinsurance market to underwrite this risk. Climate change could make it harder for reinsurers to remain diversified. This could affect their solvency. The industry may shift towards non-traditional forms of reinsurance. These could include catastrophe bonds and green bonds.^Footnote57 The current functioning of the consumer insurance market may undergo transformation as a result. This could affect the types and availability of insurance that individuals have in the future.

Community-based insurance could become more important. It could cover climate risks that other insurers do not. For example, communities could pool resources to repair local infrastructure such as parks or community centres after a disaster.^Footnote58

5.1 Game changer 1: Youth are increasingly economically precarious and could remain so throughout their lives

In this future, the majority of youth face a difficult labour market. The wealth gap between generations is growing. It could become self-reinforcing. This could impair many young people’s ability to accumulate assets and wealth.

Forces of change supporting this game changer

Compared to previous generations, young adults face lower earnings and a higher cost of living. Over the last 45 years, market earnings of 16-24 year olds fell by 24%. Government transfers fell by 75%.^Footnote60 Globally, half of Millennials and Gen Z say they are living paycheque to paycheque.^Footnote61

Young people are burdened with more debt than previous generations. The average new graduate with a bachelor’s degree has $28,000 in student debt.^Footnote62 One in four young people turns to debt to cover their living expenses.^Footnote63 High levels of debt reflect increases in tuition costs. In 1980, the average tuition for an undergraduate degree in Canada was $2,511.00 in 2023 dollars.^Footnote64 In 2023 it is $7,076.^Footnote65 The higher cost of living has also increased the need for student loans.

Young people’s employment is precarious. They have greater job insecurity and fewer benefits than previous generations. This is due to technical and economic shifts. Moreover, expectations in the labour market are changing. Offshoring, the platform economy, and AI-driven automation are among the reasons. The labour market is tight. Most job vacancies are in entry-level service positions that need little experience and pay low wages.^Footnote66

Young people are more likely to engage in gig work than older adults. People in Canada aged 18 to 34 comprise 43% of all gig workers.^Footnote67 Young people in self-employed temporary work have unpredictable income. They lack benefits such as employment insurance, sick leave, and employer-provided pension contributions.^Footnote68 Self-employed temporary workers constitute more than 20% of the labour force. They are the fastest growing labour group in Canada.^Footnote69 Half of self-employed people view their self-employment as long-term. There is evidence that some workers prefer the flexibility provided by this type of employment.^Footnote70 This challenges the notion that young people will age out of insecure work.^Footnote71 An increasing proportion of young people also hold multiple jobs. In 1976, this applied to 1.3% of young, employed women not in school. By 2019 that rose to 8.4%. Among men the increase was from 2.3% to 5.2%.^Footnote72

5.2 Game changer 2: Climate change may lead young people to re-evaluate their expectations about the future

Climate change is challenging young people’s mental health.^Footnote73 They feel distress about the future. This may reshape social values, behaviors, and practices.

Forces of change supporting this game changer

Young people tend to be more aware of the impacts of climate change and more concerned about its risks. Young adults in Canada are, on average, more concerned than older adults about environmental issues.^Footnote74 They are acutely aware of the existential risks posed by climate change. They are also aware of potential consequences for their own futures. Youth are at the forefront of climate movements, in Canada and globally. Some more radical movements have begun to emerge.^Footnote75 These movements are calling for a shift from eco-anxiety to ‘eco-fury’.^Footnote76 The fury is largely directed towards governments and the ultrarich.

Climate change is impacting young people’s mental and physical health. The effects of climate change are particularly acute on children and young people.^Footnote77 These include extreme weather events, displacement, and air pollution. For example, children are more susceptible to wildfire smoke.^Footnote78 They are more vulnerable to hyperthermia and dehydration in extreme heat.^Footnote79 Extreme weather also leads to more mental health emergency room visits. It impacts young people’s ability to learn.^Footnote80 Half of youth in Canada feel afraid, anxious, sad, and powerless about climate change.^Footnote81 They consider their generation to be unlucky compared to other generations.^Footnote82 Seventy-eight percent say climate change impacts their overall mental health. Thirty-seven percent say it impacts their day-to-day lives.^Footnote83

Young people cite climate change as a reason for making different life decisions. Nearly 2 in 5 hesitate to have children due to climate change.^Footnote84 Those who do have children may face increased anxiety about their children’s futures. More parents are organizing to advocate for policies to combat climate change based on their desire to improve the future for their children.^Footnote85, ^Footnote86 Some young people are questioning whether there is any point in saving for retirement. They expect the world to be uninhabitable by the time they grow old. They are choosing instead to prioritize the present and focus on becoming more autonomous or living a simpler life.^Footnote87

5.3 Game changer 3: Governments and key decision-making institutions may find it difficult to engage individuals while they are young, and subsequently throughout their lives

Factors that impact trust in government could be more persistent across the lives of young people. These include low income, economic hardship, and low social status. This may affect the efficacy of key institutions in the future.

Forces of change supporting this game changer

Youth in Canada are more disengaged from democratic processes than older generations. They are less likely than baby boomers to vote. They are less likely to say the electoral system is fair and representative.^Footnote88 Youth voter turnout has been declining over time.^Footnote89 Young people are, however, interested in political issues.^Footnote90 Many engage in non-electoral activities such as protesting, boycotting, sharing political information, or signing petitions.^Footnote91

Young people are less likely to accept traditional authorities and established narratives. Half of young people read the news at least daily.^Footnote92 Most do so online.^Footnote93 But they are less likely than older groups to trust established news brands.^Footnote94 Instead they seek out a breadth of alternative sources.^Footnote95 Some are factually grounded while others may be disinformation.

Young people are mistrustful of key institutions. This is due to economic disenfranchisement and climate change. It may remain so throughout their lives. Youth are less likely than older adults to trust the government. They are also less likely to trust the police, courts, schools, banks, corporations, or media.^Footnote96 Young people’s lack of confidence in institutions is correlated with a sense of feeling unheard. They find public systems to be optimized for the communication styles of older generations.^Footnote97 Those with lower incomes are especially affected.

What could these changes mean?

Implications

Financial insecurity, climate change, and feeling disconnected from key institutions might make many young people feel hopeless about the future. These factors feed off each other in a vicious cycle. Poor mental health and a complex media environment are other factors. Psychological distress is linked to financial hardship. It is more pronounced among the unmarried, unemployed, low-income, and renters. All these factors are correlated with youth.^Footnote98 Young people may also expect environmental, economic, or social collapse within their lifetime. These factors may lead to more non-working days and poorer performance at work. Young people may be inhibited in their decision-making. They may be unwilling to invest in established institutions and assets such as retirement funds and housing.

Economic precarity and climate change may reshape young people’s expectations and experiences of housing. Today’s housing policies may not meet the future expectations of youth. Young people may turn their backs on high-cost-of-living cities. They could look to more affordable regions, in Canada or abroad. Many may give up on the idea of homeownership. They may expect always to live with parents, roommates, or seniors, as explored in The Future of Households.

Young people in Canada may not expect governments and institutions to support them as they age. There is a common belief that youth often ‘make their peace with the system’ as they age. This happens as they accumulate responsibilities, becoming homeowners and raising families.^Footnote99 However, today’s young people are wary of attempts by governments and institutions to lend a helping hand. Their confidence in key institutions may not increase as they age. Factors such as low income and low social status impact trust in government. These factors are expected to be more persistent across young people’s life courses. Youth may remain distrustful of government as they grow older. They may continue to be disengaged from democratic processes. They may prefer alternative forms of political organization and action. National unity and government legitimacy could erode. The sense may grow that an intergenerational contract has been broken. Future governments may be less able to rely on popular support and moral authority to achieve policy goals.

Young people are concerned with meeting short-term basic needs. They may be unable to plan for the future. Many lack the means to invest in retirement savings or insurance. This makes them vulnerable to financial collapse or homelessness. Low income, low savings, and high levels of debt may put many on a lifelong trajectory of disadvantage. Future recessions or labour market transformations could worsen the situation. These factors may also contribute to a reluctance to take risks. More young people may prefer to seek stability over entrepreneurship, as explored in The Future of Insurance.