Is 85k a good salary in Toronto?

Is 85k a Good Salary in Toronto?

In the bustling metropolis of Toronto, where the cost of living is notoriously high, the question of whether an annual salary of $85,000 qualifies as a comfortable income is a common one. To provide a comprehensive answer, we will examine the city’s income distribution, consider the local purchasing power, and compare it to other major urban centers.

Income Distribution in Toronto

According to Statistics Canada, the median income for the Toronto Census Metropolitan Area (CMA) in 2021 was $47,800. This means that half of the income earners in the city reside below this threshold, while the other half earn more. An annual salary of $85,000 places the earner within the top 30% of income earners in Toronto, indicating a relatively comfortable income level.

Purchasing Power in Toronto

While income distribution provides a general overview, it is equally important to consider the local purchasing power of a salary. The cost of living in Toronto is significantly higher than in many other Canadian cities, affecting how much an individual can afford. For example, housing costs are notoriously expensive, with the average price of a detached home exceeding $1 million. Other expenses, such as transportation, groceries, and entertainment, are also above the national average.

Despite the high cost of living, $85,000 remains a substantial salary in Toronto. According to Numbeo, a global cost of living index, an individual earning this amount would have a monthly disposable income of approximately $3,000 after deducting taxes and essential expenses. This disposable income provides ample opportunities to enjoy the city’s amenities, including dining out, entertainment, and travel.

Comparison to Other Major Cities

To gain a broader perspective, let’s compare the purchasing power of $85,000 in Toronto to other major urban centers in Canada:

• Vancouver: A salary of $85,000 in Vancouver offers less purchasing power than in Toronto due to its even higher cost of living.
• Montreal: Montreal has a lower cost of living compared to Toronto, so $85,000 provides more purchasing power in the city.
• Calgary: Calgary has a comparable cost of living to Toronto, but the higher average income in Calgary results in $85,000 having slightly less purchasing power.

Conclusion

Based on income distribution, purchasing power, and comparisons to other cities, an annual salary of $85,000 can be considered a good salary in Toronto. It places the earner in the top 30% of income earners, provides ample disposable income for a comfortable lifestyle, and offers comparable purchasing power to other major Canadian urban centers.

However, it is important to note that individual circumstances can influence the perceived comfort level of a salary. Factors such as family size, lifestyle preferences, and financial obligations can impact the adequacy of an income.