Sonia Grossi used to think $100,000 a year was a lot of money. Now that she has finally reached that level of income, it doesn’t feel like much.
She’s not struggling to get by. But getting by is all she’s doing.
“I’m not saving for an emergency fund right now. I’m not putting a lot into my RRSP,” Ms. Grossi said. She is 36 years old, and runs her own leadership coaching business in Toronto.
“I haven’t gone on vacation all year because I can’t.”
The one indulgence – if one can call it that – she allows herself is living alone in a one-bedroom apartment, rather than sharing a home with roommates. At $2,600 a month, her rent consumes just under half of her take-home pay, based on annual earnings that fluctuate between $90,000 and $100,000.
A $100,000 income has long loomed large in the collective imagination as code for having made it. YouTube, TikTok and countless blogs tout strategies, tricks and “underrated jobs” that will, supposedly, lead to the coveted six-figure milestone.
By many metrics, $100,000 a year is still a lot of money. It’s more than roughly 90 per cent of Canadians declared as their annual incomes in 2020, according to the latest available data from Statistics Canada. But when today’s basic living costs are taken into account, there are many parts of the country where a low-six-figure salary no longer goes very far.
If Canada’s affordability crisis was an iceberg, $100,000 earners would be the tip of it. Their presence among the ranks of those feeling the financial squeeze is an indication of a much larger mass of Canadians with lower incomes, who are facing far more significant struggles.
In the run-up to Thanksgiving this year, for example, Toronto’s Daily Bread Food Bank said its member food banks had received more than 270,000 visits since August, a 51-per-cent increase compared to the same period last year.
For those with low-six-digit paycheques – particularly those without children – expensive groceries are merely a nuisance. The real issue is housing. Ask a $100,000 earner how they’re doing money-wise, and the answer hinges, first and foremost, on the cost of keeping a roof over their head.
With good financial discipline, $100,000 earners with contained shelter costs describe regular savings, annual vacations and impeccably paid-off credit card balances, even after more than two years of elevated inflation and a spike in interest rates. But for those who have to make oversized rent or mortgage payments, inflation is tightening already tight budgets. Getting by means fussing over the costs of things like medicines for sick pets. And it means struggling to add to retirement nest eggs, or puzzling over the costs of having children.
In Vancouver, the average asking rent for a one-bedroom apartment reached $2,976 in September, according to the rental listing platform
Rentals.ca. In Burnaby, B.C. it was $2,700. In
Toronto it was $2,614, and in nearby Oakville $2,502. After heating and electricity bills, these prices would mean housing costs equivalent to more than 40 per cent of the net pay of a $100,000 earner. The Canada Mortgage and Housing Corporation, the country’s housing agency,
recently described housing that consumes this much of an average household’s income as unaffordable.
The numbers look equally disheartening when it comes to homeownership. In markets like
Vancouver, Toronto and Mississauga, buying a typical house has long required a household income far above $100,000. But at current interest rates, an earner at that income level wouldn’t qualify for a mortgage even on an average-priced condo. And that’s assuming they had the financial wherewithal to save for a 20-per-cent down payment.
In Halifax, a low-six-figure earner might still get a mortgage to buy a flat. But real estate values have climbed so much that a buyer like that would likely need nearly a decade to save up a 20-per-cent down payment, assuming their income rose in lockstep with home prices. And that’s despite the fact that property values are currently down compared to their 2022 peaks.
It all comes down not just to where Canadians live, but also whether and when they were able to lock in their shelter costs.
Civil servant Liam Hudson bought his home in Edmonton, one of Canada's most affordable larger cities, in January, 2021, for $288,500.Jesse Bulman/The Globe and Mail
In Edmonton, one of Canada’s most affordable larger cities, Liam Hudson has no trouble fitting all his expenses, aggressive savings and some travel into his household budget. The 32-year-old civil servant, who earns $106,000 a year, lives frugally. He drives a second-hand 2006 Buick Rendezvous. He tracks his spending meticulously. And he has made it a habit to put $250 every other week into his RRSP and another $100 into a tax-free savings account, even though he already has a generous government pension.
Mr. Hudson said he couldn’t remember the last time he had a carryover credit card balance. And yet he’s still able to afford annual vacations. He usually travels to Victoria, B.C. to see a close friend once a year, and likes to break up winter doldrums with a trip to somewhere like Los Angeles or Mexico.
It helps that Mr. Hudson is laying out just $698 every two weeks in mortgage payments and property tax for a spacious condo in a heritage building close to downtown. He bought the place in 2021, for $288,500. Even with some exceptionally high power bills last winter and summer, as Alberta struggled with a host of energy-related challenges, his housing costs remained around 30 per cent of his net income.
“I’m very, very lucky,” he said.
It’s a sentiment that Trent Chappus, a 26-year-old in Montreal, knows well. Mr. Chappus, a software developer whose income recently crossed the $100,000 line, was able to buy his first home – a condo of just under 600 square feet in the vibrant neighbourhood of Saint-Henri – without any help from family.
Mr. Chappus, who is originally from Chatham, Ont., said it’s a feat that has left many of his friends back home dumbfounded.
“They’re amazed that I’m buying a place,” he said. “My parents’ friends are amazed as well.”