We have all heard that the rich are getting richer and that wealth is incredibly concentrated at the top of the ladder.
Canada is no exception. Nearly 11,000 people in Canada are ultra-high-net-worth individuals (UHNWIs), meaning they hold more than $30 million in liquid assets and make at least six figures per year.
So, what yearly earnings will put you in the top 1% of income earners in Canada?
A yearly income of around $260,000 is required to be in the threshold of the top 1% of earners in Canada in 2023.
Let’s get into the details and take a look at the average income and top 1% income of Canadians.
the Threshold and Average of the Top 1% Income Earners in Canada
When people wonder what income you need to crack the top 1% of Canadian earners, the minimum threshold earning point makes the most sense.
The minimum threshold earning point of the top 1% in Canada is $253,900 annually, according to a 2020 Stats Canada report, which is the latest available data.
As a safe estimation, a yearly average income of around $260,000 is reasonable for the lowest of the top 1% income earner in Canada in 2023.
Average Income vs Threshold Income In Canada: What’s the difference?
The threshold earning point is the income of the lowest earning top 1% income in Canada. You can think of the earners at the threshold income as just squeaking into the top 1% of Canadian earners.
In comparison, the average top 1% income simply takes an average of all the top 1% earners in Canada.
That is why the average earnings of the top 1% are around twice as much as the threshold.
The top 1% of income earners made, on average, around $512,000 in a single year.
What’s really interesting to note is that this was a slight decrease from the previous year (2019 average 1% income was $513,700) for the average top 1% of earners in Canada. The rest of the Canadian population saw a slight increase during that same time period.
- Related Reading: How Many Billionaires Are There In Canada?
Median Income of the Top 1% in Canada
The median income of the top 1% eliminates the outliers of the extremely rich that skew the results higher for the average income amount.
The median annual income for the top 1% income group in Canada as of 2020 is $349,900, and that was achieved at a median age of 53 years of age.
The median is significantly lower than the average income of the top 1% above, but higher than the threshold amount.
Here’s a summary of the three different measurements of the top 1% of income earners in Canada:
|Threshold Income||$253,900||The income of the lowest earning top 1% in Canada, just entering into this income bracket.|
|Average Income||$512,000||The mean of all incomes in the top 1%, roughly double that of the threshold income. This will be skewed heavily by extremely wealthy individuals.|
|Median Income||$349,900||The middle value that separates the higher half from the lower half of the top 1% income group, less affected by outliers.|
The Rich Get Richer
According to Statistics Canada and various other research institutes, the yearly income of the top 1% of income earners tends to rise faster than the rest of the population.
I’m sure we have all heard that the richest of the world are getting richer and that income disparity is growing with each passing year.
Unfortunately, many studies also show that this income inequality trend became even more exacerbated during the COVID-19 pandemic, with the top 1-5% growing vastly in wealth, especially in North America.
The top 1% statistics can be seen as a good benchmark to see how a country is doing economically.
But it’s also good to notice that it sheds light on this disparity. For instance, StatCan reported that the threshold income of the top 1% of earners in 2016 was $226,200 in today’s dollars.
In 2023, this number is likely over $260,000, and the same growth rate is not reflected in the incomes of the remaining 99%, and especially not in the bottom 50%.
Naturally, a similar trend applies to the top 1% in each age group. Here’s the net worth of the top 1% of each age group in Canada, according to Statistics Canada:
|Age||Average Net Worth of the Top 1%|
|35 to 44||$2,028,681|
|45 to 54||$4,260,230|
|55 to 64||$7,303,251|
|65 and above||$7,506,119|
As can be seen, the top 1% of income earners grows significantly between each age group, with the exception of the jump from the 55-64 to 65 and above age groups.
This levelling off can be attributed to the retirement and/or increased spending of those who are above 65. Of course, investments are likely to appreciate even after retirement, but a decreased salary and increased spending still make a big difference, resulting in this levelling off.
It is also no surprise that the top 1% grows their net worth by more than $1,420,077 between the below 35 and 35-44 age groups as younger people pay off their student loans and get settled in their careers.
But the biggest growth clearly comes later in life, which should be uplifting for us all. There is a jump of $2,231,549 between the 35-44 and 45-54 age groups and, most significantly, a jump of $3,043,021 between the ages of 45-54 and 55-64.
As a result, the 55 to 64-year-old age group seems to be the wealthiest in Canada, with their top 1% having an average net worth of more than $7 million.
This can be for a multitude of reasons, such as investments growing with a combination of contributions and interest gains, pay grades rising due to gained expertise, and inheriting large sums of money becoming more likely.
Whatever the reason, one’s average net worth grows as they surpass each age bracket, and there is no exception for those in the top 1%.
According to a 2020 StatCan study, 3.1 million people out of about 28.7 million earn more than $100,000 per year. This means that about 11% of total persons with income in Canada make over $100,000 per year.
The median total income in Canada is $40,360, which represents the income value lying at the very middle when all the numbers are sorted in an ascending or descending order.
What kind of people do you think make up this 11% of individuals who make over $100,000?
A 2019 study by TD Bank can shed some light: their research shows that women are actually less likely than men to have a high household income. Geography also plays a big part, as Albertans earn the highest wages in Canada.
Canada’s median net worth figures for different age groups are listed below as reported by Statistics Canada. As I mentioned earlier, these figures tend to rise with each age bracket, with the exception of those 65 and older.
|Age||Median Net Worth|
|35 to 44||$234,400|
|45 to 54||$521,100|
|55 to 64||$690,000|
|65 and older||$543,200|
The above numbers apply to individual persons. The median net worth of Canadian families was $329,900 in 2019.
what are the top-paying careers in Canada?
Curious about what careers can lead to a six-figure income? Here’s a quick breakdown of some of the top-paying jobs and careers in Canada.
Full-Stack Software Developers
- Median income: $122,714
Full-stack software developers are programmers who are versed in multiple coding languages, which allows them to create complex applications and programs.
Since programming languages are constantly evolving and changing, full-stack developers must keep pace, consistently building on their existing skills.
The great thing about a career as a developer is that you don’t always need the same formal education as doctors, lawyers, and other six-figure salaries.
In fact, many of the world’s top tech companies, like Google, Apple, and IBM, are more focused on an applicant’s raw skills rather than their degree. Developers who work with these companies are some of the highest income earners in their fields.
- Median income: $100,000
The median income for doctors in Canada sits right at $100,000. Highly experienced doctors and medical professionals can earn an average income of $300,000 or more, especially if they specialize in their field.
Although becoming a doctor typically requires at least seven or eight years of formal education through medical school, it’s a rewarding career that allows you to save lives and give back to your community.
- Median income: $93,634
As the country continues to grow and develop, there will always be a need for skilled electrical, civil, and mechanical engineers. As an engineer, you’ll use your knowledge to help with the building and construction of new projects as well as modernizing existing structures.
While the median income for engineers in Canada is just over $93,000, highly skilled engineers can earn an average income of $147,000 per year or more.
Intrapreneurship vs entrepreneurship
Scrolling through social media, you’ll see countless posts with business ideas, side hustles, and get-rich-quick schemes. Many of these are legitimate business ideas.
However, social media also has the effect of making things seem a lot easier than they actually are. It’s easy to focus on the foreign cars, vacations, and fancy dinners while ignoring the struggle it took to get there.
While it’s possible to become a top 1% income earner through entrepreneurship, starting a business isn’t the only way to earn six figures (or at least close to it) in a year.
Intrapreneurship is the art of growing within an existing company. You’ll perform your job to the best of your abilities, make an effort to excel and grow within the company and provide genuine value to your employer. If you can negotiate an equity stake, this has the potential to propel you into the top 1% if the company does well.
If you can stand out and go the extra mile, you can often ride the wave of success as the business you’re working for grows. Simply put – you stand to profit and earn more if you help the company you’re working for generate more money.
Starting and growing a business often involves years of hard work, self-doubt, debt, and other not-so-pleasant realities. Not everybody is cut out for this. In many cases, the average income for intrapreneurs can be higher than the take-home income for entrepreneurs.
Many small and growing businesses are desperate for motivated, hard-working individuals who are willing to be team players. If you can fill this role, you’ll be surprised at how you may be rewarded as the company grows.
Investing for long-term wealth
One of the common pitfalls that many young professionals fall into is failing to plan for the future. Once you start earning a good salary, it’s natural to jump into buying a nice house or leasing a new car.
However, if you’re willing to live below your means for a while, you can invest the money you would otherwise spend, allowing you to grow your money and set yourself up for future success.
- Related Reading: How Much Do You Need To Retire In Canada?
The top 1% of earners in Canada make hundreds of thousands of dollars per year, and their household income grows significantly with each passing year. Statistically speaking, most Canadians are more likely to be in the 99% category, but this certainly does not mean that they are not well-off.
It is true that wealth is concentrated at the top, but regardless of whichever “group” you fall into (that is, whether you are in the top 5%, %10 or 20%, or in the bottom 50%), the truth is that most people are trying to make it to next step in the ladder.
I’m sure that many of those who fall into the top 1% are eyeing the top 0.1% megamillionaires, which is likely true for most people going down the income ladder, as well.
It feels like there is always more money to be made and more wealth to be acquired, but I recently read several studies that found that the happiness people derive from money levels off past making $80,000 per year.
Either way, one of the best ways to grow your net worth and get to the next “group” can be by supplementing your income through a variety of ways. I find side hustles and income-generating hobbies can be great for this.
Want to read up more on net worth in Canada? Check out this post on Net Worth By Age In Canada to see how you stack up.