How rich are you? Work out where your income and wealth sits in the UK

How rich are you? The highly subjective answer to that will be influenced by your attitude to wealth, income vs spending habits, and where in the country you live.

The debate on what being wealthy actually means came to the fore last week, with a story about households who were earning £70,000 but said they were just about managing.

Predictably, many readers were dismissive of those claiming their family was struggling on such a relatively high income. ‘They’re rich’, they cried.

Others, however, said that those claiming to be just about getting by had a point. ‘Oh no they aren’t,’ came their reply.

The ONS figures reveal how the UK's household disposable income is dividedThe ONS figures reveal how the UK's household disposable income is divided

The ONS figures reveal how the UK’s household disposable income is divided

Really, both sides of this argument are right.

With £70,000 of household income split equally, a two working parent family, with two children under 13, would have after tax income of about £53,900 – higher than 76 per cent of the population. They are comparatively rich.

Yet, while £70,000 coming in each year would probably make you feel fairly flush in the North East of England, it is unlikely to pull off the same trick in North East London – which, it should be noted, is not a traditionally wealthy area.

HOW THIS IS MONEY CAN HELP

But as well as tapping into the ‘they earn how much, and they said what’ element of a winning story, it also appealed to our love of finding out where we fit in the financial pecking order.

WHAT IS THE MEDIAN?

The median is used as a better measure of the average household than the mean.

The mean, which is all households added together and then divided by the number of households, can be skewed by a few big numbers.

The median is the household in the middle, if all were lined up in a row.

This gives a better representation of the typical middle-ground household.

Fortunately, for people interested in how rich they are, the ONS updated us on its household income figures this week.

It revealed that lowest fifth of households has original income of £7,153, the next has £13,877, the middle fifth has £26,983, the fourth £43,261 and the top fifth £84,747. The median for the whole of the UK was £35,204.

The ONS report then takes these figures and measures disposable household income from earnings, pensions and investments, and cash state benefits, after income tax, national insurance and council tax.

The good news is that at £26,000, the median household in 2016 was up £600 on the year before and now £1,000 higher than the pre-financial crisis level.

The fact that it has taken eight years for household incomes to rise by this amount is a mark of the stagnant wage growth Britain has suffered since 2008. Economists at the IFS also pointed out earlier this year that household incomes among the poorest are rising not because of wage rises, but largely because people are working more hours.

Concerns over high executive pay and the huge wealth of the super rich have led to worries about inequality, but Britain is getting more equal, says the ONSConcerns over high executive pay and the huge wealth of the super rich have led to worries about inequality, but Britain is getting more equal, says the ONS

Concerns over high executive pay and the huge wealth of the super rich have led to worries about inequality, but Britain is getting more equal, says the ONS

And while we quite rightly worry about inequality, Britain’s disposable incomes are the most equal they have been since 1986.

Median disposable income for the poorest fifth of households at £12,459 was up 5.1 per cent, or £700, last year, while for the richest fifth it rose by 1.9 per cent, or £1,000, to £62,373.

Inequality is measured using something called the Gini co-efficient, where a reading of 0 would be an entirely equal economy and 1 would mean one person had all the income.

The UK’s original incomes gini figure is 0.49, whereas the household disposable income figure is 0.32. This highlights how tax and benefits do much of the heavy lifting when it comes to evening out inequality.

But while the statistics show that Britain is becoming more equal, a deep concern remains about the gulf between the rich and the poor’s incomes – and you don’t need to be Jeremy Corbyn or Thomas Piketty to spot there’s something askew.

Chief executives in the FTSE 100 earned 129 times more than their average employee, according to the most recent statistics from the High Pay centre. The bosses’ earnings are up a third since 2010, a period over which average wages have risen 8.1 per cent, according to ONS figures.

If you want to drill down much deeper into where your income stands, think-tank the IFS has a nifty Where do you fit in? calculator, which allows you to put in your circumstances and find out how you compare to the rest of the country.

You need to know your post tax income, which you can use this take home pay calculator to broadly work out.

Be warned if you’re aiming high, to be in the richest 1 per cent of the population, a family of two working parents with two children under 13 would need to earn £170,000 after tax.

The ONS household wealth figures chart above allows you to place yourself within the percentiles of the UK populationThe ONS household wealth figures chart above allows you to place yourself within the percentiles of the UK population

The ONS household wealth figures chart above allows you to place yourself within the percentiles of the UK population

But as we all know, income is also only a part of where you fit in the financial pecking order. Overall wealth matters too, especially in an asset rich country such as Britain.

To find out where you feature on that scale, you need to turn to a different set of figures produced by the ONS, although these are unfortunately less frequent.

The ONS’s Wealth and Assets survey breaks down what the country owns by percentiles. It includes in there:

The most recent figures that run to 2014 show that the bottom half of UK households have just 9 per cent of the wealth, whereas the top 10 per cent own 45 per cent of it.

The median household wealth was £225,100, while the bottom 10 per cent of households had total wealth of £12,600 or less and the top 10 per cent had £1,048,500 or more.

To make it into the 1 per cent, you need £2,872,600 of household wealth.

The bottom 1 per cent has negative wealth – at minus £4,434 (although to me this percentage in negative wealth seems low and I would expect debts to push more people into that category).

You can check where you stand by totting up your own figures and then seeing where you are on the chart above.

WHERE WEALTH COMES FROM

Surprisingly, the ONS figures show that overall it is actually pension wealth that accounts for the largest chunk of the overall figure, at 40 per cent, followed by property wealth, at 35 per cent.

However, while their median pension wealth value of £749,000 contributed 43 per cent of total wealth to the top decile of households, where 98 per cent had some, it contributed just 29 per cent to the total of the least wealthy half of households.

Property wealth was more important for this lower half, where it contributed 34 per cent of the total, even though just four in ten owned homes. Property with a median value of £420,000 contributed 31 per cent to the total wealth of the top 10 per cent.

Posted on; DailyMail>>

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One comment

  1. Let’s be honest, this is a completely relative question with a completely subjective answer. And it all comes down to how each individual perceives being wealthy. A household income of £200,000 can make some people depressed, and make them feel useless and worthless because they are earning such a small amount, while a household income of £30K can make some others feel like Jeff Bezos (the wealthiest man on earth).

    And this is only because we’re so selfish and unsatisfied, and ungrateful, that every time we get what we strive for, we want more, and the happiness of getting it will only last for a short while.

    So I think we have to accept in our lives that the concept of “rich” is only temporary – once you get to the financial level that will get you that status, that “rich” feeling will fade away with every second that will pass, and most people will feel poor again within a few years.

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