715,000 Millionaires in UK - are you one of them?

Pincher

The problem is, you can't spend the house you live in,
so can't count the first million.

The second million is mostly capital gains, plus mortgage.
You buy a BTL house for £200k, and it's worth £800k now, but there's a lot of costs if you want to spend it.

You sell it for £800k, and then

Pay off £200k interest only mortgage,
Pay £168k CGT, 28% on £600k,
Don't forget £24k in sales commission,
Maybe £5k on solicitors and other expenses (e.g. moving)

So, you end up with ~£400k, whereas £800k was working for you if you left it alone. Even with another BTL, you end up with only £800k, not enough for a second million.

kidmugsy

Picture two civil servants, both on £40k salary. They retire at 60 with FS pensions of £20k p.a. each. To buy index-linked annuities of the same size would cost them - what? - £600k each? More, probably.

Anyway, that means the household is "millionaire", long before it gets its State Retirement Pensions, irrespective of its savings and investments, and whether it owns a house.

If they were on a more modest £30k salary each, their household would become "millionaire" once it started its State Retirement Pensions. Or if it happened to own a house.

The idea that a couple on £30k each with next-to-no savings is "millionaire" puts the idea into perspective. Of course, if the definition excludes the capitalised value of pensions then it is effectively just a lie.

jimjames

Archi_Bald wrote: »

It would be useful if you posted the precise definition.

Even the article link posted doesn't give a definition. If it includes pensions then I think there will be many more millionaires. Even with housing included there are lots and does it also consider debt so only property net of mortgages?

noh

The newspaper article was based on this from Barclays Wealth management.
It doesn't define what constitutes a millionaire buy it does refer to them as individuals.

masonic

It is unlikely that less than 2% of households (only 1 in 65) have >£1m of assets including property and pensions. Hard to say where the data comes from. All they say about the millionaire calculations is:

Data on the number of millionaires within each UK region, used alongside the Prosperity Index, has been calculated by Wealth-X and incorporates factors including spending, investment and asset valuations from both public and proprietary sources.

I can't imagine there is sufficient information about the value of individual's total assets to do a proper study.

Must have been a slow news day.

racing_blue

Office for National Statistics do it this way:

http://www.ons.gov.uk/ons/rel/was/wealth-in-great-britain-wave-3/2010-2012/info-wealth-and-assets-survey.html

Included is net property, net financial, physical and private (but not state) pension wealth

racing_blue

Key Points
In 2010/12:

Aggregate total wealth of all private households in Great Britain was £9.5 trillion.

The wealthiest 10% of households owned 44% of total aggregate household wealth.

The least wealthy half of households combined owned 9% of total aggregate household wealth.

Private pension wealth was the largest component of aggregate total wealth.

Half of all households had total wealth of £218,400 or more.

Households in the South East had the highest median wealth (£309,700).

theGrinch

Did they take into account debts when calculating the millionaires? Debt like mortgages.

chucknorris

theGrinch wrote: »

Did they take into account debts when calculating the millionaires? Debt like mortgages.

Whether they did or did not, it doesn't matter, what matters is how you sensibly define and know your own personal wealth, and obviously it should be net wealth. You can't be a millionaire if you have a £1.5m house, with a £700k interest only mortgage and no other assets (pensions are obviously assets), that is just common sense.

There isn't anything 'magical' about a million (I don't think it means that much nowadays anyway, it certainly isn't the milestone that it was decades ago), someone with far less than half that could have a much better lifestyle than someone with a million, depending on their circumstances, and in particular where they live (and want to stay living, because people can of course take advantage of downsizing in property value).

Snakey

On paper I am - the equity in my flat plus my pension fund.

However, to access the first I'd need to move away from the place I call home, and to access the second I need to wait 12, no 15, no actually maybe 23, years.

The actual money in my current account i.e. the money I have available to spend, since it's the day before pay day, is well under £100, plus there's probably about £6 in my emergency change tin. All you can say about the rest of it is that it's much nicer to have it than to not have it - to dismiss it as worthless would be to miss the point, but it is a definite fact that I cannot go out and spend it over the weekend.

"I'm a millionaire" in 2015 certainly doesn't have the connotations that it did in the 1970's when I was growing up and the maximum pools jackpot was less than that and you could buy a house outright for twenty grand.