My Situation

jamesd

Shimrod, it's household wealth and some will own more than one property as part of their household wealth, as PipPip's household already does. If you look at the full report you can see the numbers broken down in various ways that might make interesting reading for you. That includes medians as well as means. If you look at page 10 of the study figure 2 seems to show that the top 5% have about 30% of total household wealth. It's too hard to interpolate to try to work out what the top 1% might have. Something like 45% for the top 10% so that would be quite a big skew towards the upper end.

Personally, I was surprised how high the figures were for the top half of the population. Perhaps too much reading and writing in this place, which seems to be very heavily skewed towards the lower net worth parts of society. That's a good thing, of course, since the lower net worth people are the ones least well provided for elsewhere and those who can benefit most from any help provided.

Might also be interesting to mention the breakdown of national household wealth by type of wealth:

39% property
39% pensions, not including state pensions
11% physical goods like cars
11% financial wealth including savings and investments

One reason for the averages and higher deciles being much wealthier than many here might expect is that they tend to have accumulated a lot of pension and property wealth, since that increases during working years. It's very hard indeed for someone still in say the first half of their working life to have more than someone of comparable situation at that point in their work history who's about to retire.

PipPip

Some interesting information. All I really want is a reasonably comfortable retirement and do not have aspirations of achieving a luxury lifestyle. We actually live very frugally and in many months spend no more than €1,000 on all our food and bills (excluding housing). For the record I'm from a very poor 1 parent family and went to a regular comprehensive school, every single penny I have is entirely through hard work with zero social or family advantage (can't say the same for most of my work peers). My wife is from a poor communist upbringing. I think this makes us value the pennies more than others from wealthy backgrounds who "expect" to achieve an income/lifestyle that for us not something we take for granted. Hence you find me on MSE seeking advice!

jamesd

Good to read another disadvantaged background person doing well. Living frugally should make it a lot easier to get ahead financially. What I try to do is not spend much beyond what my assets will allow me to spend for the rest of my life if I had to live off them. That's way to strict for most people but it's an interesting exercise if your objective is to rapidly increase financial security.

Linton

jamesd wrote: »

According to the Office for National Statistics the top ten percent of households have net worths of four million Pounds and higher. In this case net worth seems to be about £660,000 and that puts it just about at the average UK net worth, perhaps just into the upper half. It seems to be growing very healthily and looks to have a good chance of being in the top 20% by age 60. The top 30% should easily be achievable.

There's more detail available in the ONS paper Wealth in GB, based on the Wealth and Assets Survey.

According to 2007-2008 HMRC figures an income of above £100,000 but below £150,000 placed it in the top 2% of UK incomes. That's a very healthy position indeed. While I'm looking, the top 8% of UK tax payers had an income over £50,000 and the top 25% over £30,000. But note this is taxpayers, not whole population.

I think you have misinterpreted the graph. The y axis is in £M. I think it is saying that the top decile in total own £4,000,000,000,000. It isnt saying that the average in the top decile is £4,000,000. To get the average wealth of the top decile we would need to know how many households there are in the UK. Assuming 20M that would give average total wealth of £2M owned by the top decile. Of course this is heavily skewed by a small number of extremely rich people. Perhaps of more interest is the 9th decile with an average of 1,600,000,000,000/2M=£800K.

As far as I can see in the report the distribution of individual household wealth is only given in quartile terms. The 3rd quartile figure being around £460,000 (from Fig 2.6). ie 25% of all households are richer than this.

I believe I am right, but if not pls correct me.

jamesd

Linton, thanks, you're right, the full report makes it clear that Figure 2.2 that I saw on the front page is the total wealth of those in that decile, not the wealth of individual households.

marklv

jamesd wrote: »

According to the Office for National Statistics the top ten percent of households have net worths of four million Pounds and higher. In this case net worth seems to be about £660,000 and that puts it just about at the average UK net worth, perhaps just into the upper half. It seems to be growing very healthily and looks to have a good chance of being in the top 20% by age 60. The top 30% should easily be achievable.

There's more detail available in the ONS paper Wealth in GB, based on the Wealth and Assets Survey.

According to 2007-2008 HMRC figures an income of above £100,000 but below £150,000 placed it in the top 2% of UK incomes. That's a very healthy position indeed. While I'm looking, the top 8% of UK tax payers had an income over £50,000 and the top 25% over £30,000. But note this is taxpayers, not whole population.

Interesting, though I think the 'net worth' figures are skewed by a disproportionately high number of 60+ retirees sitting on mortgage free houses that have gained hugely in value in recent years, and on large cash savings augmented by inheritances and lump sums from final salary pensions. I would be interested to know the median figure is for a 40 year old couple with two kids.

The Institute of Fiscal Studies gives a more revealing picture of income, if not 'net worth': http://www.ifs.org.uk/wheredoyoufitin/

PipPip

Well I met the independent financial advisor today. Interesting discussion which started with us discussing each others backgrounds and when I told him that I am a chartered accountant and I work for a life insurance company he asked me why it is not me giving him the advice. Truth is that I simply do not have the time nor the inclination to learn about all the myriad of products out there, especially the French and offshore products. Anyway, I very much liked for once being able to talk to someone about my leaseback property, my split UK/French tax/social security status, my French share options etc etc and all the questions I have who was not remotely phased by any of it and indeed seemed to genuinely know a lot about it. I have some reservations about what he will recommend as he's a commission earner rather than fee charger, but let's see. I learned some stuff from him already and he has some interesting initial thoughts about sheltering my share options and my leaseback property in an offshore SIPP. I think the charges of such a product may put me off but I'll give it chance before dismissing. Overall I think this guy will give me some reasonable ideas and I won't at all begrudge him commission if the right product is proposed.

jamesd

PipPip, well, he did well to show you some professional respect at the start. Good to read that you had a positive experience so far.

marklv, no figures for that specifically provided but figure 2.12 gives for a couple with dependent children a mean of £390,000 and median of £230,000. That includes pension, but not state pension, wealth. Without that it's £250,000 and £160,000.

For age, without considering children, using figure 2.7 it's £280,000 mean and £180,000 median including pension wealth and £190,000 mean and £110,000 median. This for households with a 35-44 year old as head of the household.

Wealth on average starts to decrease after age 60 or so, so you're putting too much emphasis on the money held by those who are retired, though it is a large chunk at the start that is gradually spent over the 23 plus retired years that an average person can now expect after retiring at 65.

marklv

jamesd wrote: »

For age, without considering children, using figure 2.7 it's £280,000 mean and £180,000 median including pension wealth and £190,000 mean and £110 median. This for households with a 35-44 year old as head of the household.

This seems more realistic now. The 50-65 age group is the wealthiest and they are a rapidly growing sector of the overall population - 'baby boomers' etc.

Lies, damned lies and statistics!!

PipPip

Just thought for completeness I would return with the advice from the IFA since it may be useful for others in similar situations:

- He advised me to transfer my legacy defined contribution schemes to a QROPS only if I am very sure we will one day retire to France. We are not sure so will skip this.
- He informed me that since I am still in my first 5 years of residency in France I can receive full tax relief in France for personal contributions to my UK pension scheme up a maximum contribution level of 10% of my prevuous years declared income or €24k of contributions. This is good news and means I can pay around €12k in AVCs each year.
- He informed me that if I buy an offshore Assurance Vie then I can invest in a product which is tax efficient in both France and the UK (no tax in either county during accumulation phase and tax efficient withdrawals subject to limits in both countries during the withdrawal phase. Also I can hold my employer shares in this wrapper once the share options mature.
- Some good advice about my French leaseback investment. Normally you need to hold a property for more than 15 years to be exempt from French capital gains. But there is useful loophole. Apparently since I will have been tax resident in France for more than 2 continuous years during my life, when we ultimately sell it if we are not French resident at the time the sale will be free from CGT regardless of the length of ownership of the property.

There were various other suggestions in his report which were more on tax efficient short term savings vehicles. Overall some good advice, although I am waiting to establish the level of the charges on the Assurance Vie before I proceed.