While it’s not surprising to many that the cost of living in Toronto comes at a high price, just how high a price is not known to everybody.
For a traditional “middle class” lifestyle which takes into account, two spouses and a child, ability to finance their child’s education, home and car ownership and retirement savings, this would require $123,388 per year, after income tax.
According to a recent report by Fong and Partners Inc., the middle class lifestyle was common and available to many people 30 years ago, but today is only available to the top 10% economic class.
For a single person in Toronto, Victor Fong told Daily Hive that the individual would need to make a gross salary of $102,000 or an after-tax income of about $74,000.
This salary is based on Fong’s calculations which are assumption but what he considered “reasonable and typical.”
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It would be a single person with no children, a one bedroom condo with one parking spot in Toronto’s core for $670,000, a 20% downpayment for the condo purchase, the mortgage would be paid of in 25 years at a 3% annual rate of interest — therefore the mortgage payment is $2,540 a month.
And, the person financing a $29,000 vehicle at an annual interest rate of 4.49% over five years — meaning a car payment is $649 monthly.
Also, if the individual wants to retire in 35 years with an annual income of $40,000, during this time the retirement fund will earn an average annualized return of 10% per year with the inflation rate being 2%.
That would mean a saving of $861 per month to meet the retirement goal.
And Fong only sees the wealth gap growing, due to increasing housing costs.
“This is because of the money-printing that is happening in the US, Europe, and Canada to battle the economic effects of COVID-19. Money printing causes inflation in asset markets such as real estate, which naturally increases prices,” Fong said.
“Real estate prices had skyrocketed in the previous 10 years due to money-printing after the 2008 financial crisis.”
So while the real estate market is influx due to the pandemic, housing in the GTA is soaring once again, outpacing the rest of Canada to a price of almost $900,000.
Living in Toronto is an expensive reality, that will only grow in dollar signs.