What are high earners not rich yet (HENRYs)?

What is a HENRY-millennial?

Millennial HENRYs make $100,000 or more, but still struggle to pay the bills and are often strapped for disposable income.

Millennial HENRYs tend to be upwardly mobile career professionals working in technology, medicine, banking or law. Due to class and social pressure, they often spend their disposable income as fast as they can earn it on paying down outstanding debts, schooling for their kids and the lifestyle associated with their profession.

In Canada, as a whole, those making over $100,000 per year are within the 90th to 99th percentile range depending on age, according to Statistics Canada. If you’re in the 90th percentile, this means that you make more than 90% of Canadians.

The degrees that put you in this initial income bracket typically involve onboarding a lot of student debt, which is where the problems can begin to pile up.

Let’s say you’ve just graduated from a prestigious law school and have found work at one of the “Seven Sisters” law firms in Canada (AKA the best in the country). This is great news for your professional development. However, to get to work you need a new, centrally located apartment. This means higher rental costs. You also have a lingering line item of at least $71,444 in debt from law school.

Suddenly, that shiny new salary is creeping ever downward thanks to a combination of existing debt, cost of living adjustments to support that new high income job and lifestyle changes.

At this point, some high earners start saving and investing aggressively to begin generating returns. For those who want it all, but now, consider getting a credit card tailored to high earners so you can start collecting rewards and points that match your income, and the lifestyle that goes with it.

Either way, this can lead to HENRYs having only a little bit of disposable income each month despite raking in more than six-figures.

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How do I become a HENRY?

The first step to becoming a HENRY is to start planning now, especially if you’re still in school.

Look at which professions make over six figures. Consider the amount of debt you’ll acquire and the employment prospects after graduation. It also helps to consider looking for a spouse in a similarly high paid field.

Those with families also tend to be in higher income percentiles.

For instance Canadians who were married, or with a common law partner, and who had children in the 95th percentile made an average of $124,000. Meanwhile those in the 90th percentile made slightly under the HENRY benchmark at an average of $98,000, according to Statistics Canada. This makes sense. You’re combining incomes into a single household after all.

For those on the edge, there are a few things you can do to push yourself over into HENRY territory.

Start by looking at the differences in cost-of-living throughout Canada. Shaving between $1,000 and $1,500 off your monthly rent payments can result in saving between $12,000 and $18,000 per year.

If you’re making $88,000 this can push you over the edge, or close to it.

Who else qualifies as a HENRY?

On the other hand, established HENRYs have household salaries of between $250,000 and $500,000 and have often experienced significant lifestyle creep compared to their millennial counterparts.

In Canada only 405,700 people reported an income of $250,000 or more. To put this in perspective, Canada had a population of 36,991,981 in 2021, according to Statistics Canada.

That’s 1.1% of the population.

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What HENRYs complain about the most

For most HENRYs, the biggest pain point isn’t just managing existing debt while building out their investment portfolios. It’s the taxes while doing it.

In Canada, there are five tax brackets that range from those making less than $55,867 to those making over $246,752 on their taxable income. Three of the five categories always apply to HENRYs.

• When you make more than $246,752+, you’ll be taxed at 33%
• When you make between $173,205 and $246,752, you’ll be taxed at 29%
• When you make between $111,733 and $173,205, you’ll be taxed at 26%

Those on the cusp of the six-figure salary range are taxed at the same 20.5% rate as Canadians making above $55,867. Yes, you read that right. If you’re making a clean $100,000 you’ll be in the same tax bracket as someone making $60K or $70K.

You’ll be paying taxes at a provincial or territorial level, too. These can result in up to an additional 21.8% in provincial taxes, but for HENRYS just starting out tend to be between 7% and 10% in most provinces, according to the Government of Canada.

When does a HENRY finally start feeling rich?

The truth is that most HENRYs will never feel rich if they allow lifestyle creep to get the best of them.

The amount you save will always feel like it’s not enough if you’re constantly chasing a high salary and the lifestyle that comes with it. It’s important to find ways to compromise during your climb to the top.

Striving to live in the best neighbourhoods, send you kids to top schools and have the best investment portfolio growth year-on-year is commendable. Building a house of cards that might topple with a change of financial fortunes is not.

For HENRYs looking for a day-to-day edge to maximize your potential check out Money.ca’s coverage of the best credit cards for HENRYs**.

Sources

1. Statistics Canada: Income Explorer, 2021 Census (April 17, 2024)

2. CarrerinLaw.net: What are the Seven Sisters Law Firms in Canada?

3. Lawyers Financial: Student debt: seeking out the truth, the whole truth, and nothing but the truth

4. Statistics Canada: Consumer Price Index by geography, all-items, monthly, percentage change, not seasonally adjusted, Canada, provinces, Whitehorse, Yellowknife and Iqaluit

5. Statistics Canada: Tax filers and dependants with income by total income, sex and age

6. Government of Canada: Income tax rates for individuals

7. Government of Canada: 2024 provincial and territorial income tax rates