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that makes you have an above average income. That is not the same as rich. income is one attribute of wealth. Its wealth that makes you rich
many of the richest in our society have zero taxable income and huge assets. With a taxable income of zero would they be deemed poor?
Agree with TiRed, the system shouldn’t disincentivise work with punitive charges at particular thresholds etc.
This.
Plus, as a matter of principle, the state should not encourage or support excessive wealth. Therefore support should taper.
Its both wealth and income that makes you rich
I love ignore me because I tell the truth that someof you do not want to hear
Salery of £120 000 pa - rich
pension pot of a million - rich
Wait till they decide to remove the 25% tax free lump sum drawdown from a pension pot. That will be the day I retire! It’s already been mooted.
an easy change along with the LTA increase would be to limit 25% tax free to an amount as well - say £250k to be close to what it is at the moment. That way people saving over £1mm aren't really going to gain very much from their savings, but they won't be penalised either
that makes you have an above average income.
Pensions are assets, not income.
Pensions are assets, not income.
"If you have a defined benefit pension (also known as a final salary or career average pension) you'll be paid an income for life, which will be taxable as earnings. You might also get a tax-free lump sum alongside this"
your point? when you take the pension it provides income, which can then be taxed. anyway it was relating to the point above of income from 1m pension pot vs average salary
We as a country are in a bad situation when our senior skilled people (doctors are the easiest example, but it hits many more) no longer wish to work due to the pension rules.
And TJ just no, this clearly isn't a topic where you will see anything other than your viewpoint. Above national average salary does not automatically equal rich (which was your original statement of fact). such a blinkered sweeping generalisation
pension pot of a million – rich
Not necessarily. There is no agreed definition of "rich" anyway. Subjective. And certainly not a binary proposition.
And TJ just no, this clearly isn’t a topic where you will see anything other than your viewpoint. Above national average salary does not automatically equal rich. such a blinkered sweeping generalisation
No - but 4x the national average wage makes you rich. more than the average wage as your pension makes you rich. 10X the average in your pension pot makes you rich
Some of you have really skewed ideas of what riches are in this country
To claim a million+ pound asset does not make you rich is absurd. to claim an income in the top few % of the population does not make you rich is absurd.
Agreed. Using doctors as an example, consultants earn in the top 2% of earners in the UK, and likely end up with pensions even closer to the top given the generous nature of NHS pensions. What you call it is immaterial.
No – but 4x the national average wage makes you rich. more than the average wage as your pension makes you rich. 10X the average in your pension pot makes you rich
the first of these does not. Rich is a classification of assets, not income. When I was ~5 years into my career I probably had 4x the average wage (depending on which method is used to measure that), but had a total net worth that was negative, due to student debts and exactly zero assets apart from a £1k car. I was not rich.
Of course you were in comparison to the vast majority of the population.
The total unwillingness to understand that owning and earning these huge sums puts you in the richest few % of the country is shameful
Rich is a classification of assets, not income
Defined by who and where? the two are interlinked.
your point?
My point is that it should absolutely be considered as wealth, rather than income. I quite agree that income does not equal wealth.
when you take the pension it provides income, which can then be taxed. anyway it was relating to the point above of income from 1m pension pot vs average salary
Yes, your wealth may be used to provide an income.
Noone is saying that you haven't worked for or deserve that pot of money. But you have an asset that, for no further work on your behalf, will provide you with an income that's greater than the average person who works 40 hours/week. In my book, that definitely counts as rich.
Rich used to be used to describe a lifestyle. When I was a child in the 60s (I think I'm about the same age as TJ), a millionaire was rich, and I lived in an area of North London where there were many such people. They would have a Roller, maybe a yacht, a big house, maybe with staff. You wouldn't get anywhere near that lifestyle on £120k pa and a £1m pension pot today - you may have an above average amount of money, it doesn't mean that you are rich.
Also to widen the argument even those on average wage in the UK are rich in a global sense. It’s all semantics anyway but to claim you’re not rich in relative terms by almost anybody’s description if the word of you earn 4x UK average wage is similarly ludicrous to politicians who claim its difficult to get by on 80 grand a year.
You may not have had assets but you could live extremely comfortably excepting if you were in some sort of major self inflicted financial bother.
on £120k pa and a £1m pension pot today – you may have an above average amount of money, it doesn’t mean that you are rich.
4 timnes the national average wage and 10x the average assets does not make you rich? Its puts you firmly in the richest few % of our society
Defined by who and where? the two are interlinked.
the dictionary?
https://dictionary.cambridge.org/dictionary/english/rich
having a lot of money or valuable possessions:
just because you have a different interpretation of the word, doesn't make it so
having a lot of money or valuable possessions:
Income as well as capital then. Seems simple. Now show me where its defined as assets only not income
Are you really trying to claim that if you had an income of a million a year but spent it all on leased cars and houses and coke and hookers and thus had little capital assets that you would not be rich?
Income as well as capital then. Seems simple. Now show me where its defined as assets only not income
income isn't money.. I can't buy something with the fact I have an income. Try this definition
"having money". Having a large income does not mean you "have money".
Of course it does! absurd. If you have an income of 4x the national average then you "have money"
Of course you can buy stuff if you have an income in the richest few % of the population
Now please - a definition that states its just assets not income
Rich is having paid off the mortgage. Wealth is forgetting how many houses you own. 😉
One fifth of pensioner households are asset millionaires. That includes property, savings and pension assets. BOMAD# is the ninth largest mortgage lender in the UK. In London it’s even higher. You can see where some of that pension income is going.
#BOMAD is bank of mum and dad.
A £1M pot converted to an annuity at 68 will get you £50k a year which is subject to tax. Not bad but hardly rich either.
I think there's some middle ground there - if you've a high income and thus have a large amount of available money, then yes, rich.
If you've a high income, but it's all being used to service prior debts (student loans, failed businesses, medical bills, whatever - not asset backed or luxury debts like mortgages or car loans) and you have little available to invest/fritter away, then no.
A £1M pot converted to an annuity at 68 will get you £50k a year which is subject to tax. Not bad but hardly rich either.
Puts you firmly in the top few % of the richest in the country
A £1M pot converted to an annuity at 68 will get you £50k a year which is subject to tax. Not bad but hardly rich either.
This.
So being in the top few % of the country income wise means you are not rich? riiiiiight
It's crazy to convert a pension to annuity income and then claim that because of the amount of income, it doesn't make you rich.
If you had a £1m property portfolio, which "only" generated £40k p.a. in rental income, you're still rich.
A £1M pot converted to an annuity at 68 will get you £50k a year which is subject to tax. Not bad but hardly rich either.
That is 50% higher annual income than the national average of working people.
Assuming that anyone who can amass a pension fund alone of £1m+ also has other wealth/resources such as property with paid off mortgage, savings etc. A reasonable assumption I think.
So, £50k a year with no mortgage yes puts you firmly into the 'wealthy' category.
And I have no sympathy for someone passed retirement with a big mortgage - you can downsize and live mortgage free.
You can see here, on income alone £50k is in the top 5% of the UK:
https://ifs.org.uk/tools_and_resources/where_do_you_fit_in#tool-results-section
(and a quote when you put in £50k income is:
In conclusion, Your income is so high that you lie beyond the far right hand side of the chart.
Then we have compared to retired people:
Retired households have a median of £25k a year per person income, compared to £34k per year for working persons:
https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2022#:~:text=Median%20income%20for%20non%2Dretired,FYE%202013%20to%20FYE%202022).
You can also add in property and pensions into this UK calculator: assuming that you have £50k income, £1m pension, £300k house (UK average) paid off, £20k savings and a modest £5k car, you are in the top 9% of households. Double the house value and you are in the top 2%....
https://www.varbes.com/your-money/net-worth-calculator-uk
I'd hazard a guess TJ if you took all your assets and calculated your total worth then deducted your essential outgoings would probably be surprised to find out how well off you are compared to the average.
a more useful measure is disposable income rather than pretty silly binary measure of income.
there was a period in our lives when we had 2 in nursery we were actually negative disposable jncome for 6 months. and that's with two above average incomes. that's the sort of thing that needs sorting
BTW I earn no where near 120k nor will I have a 1m pension pot so I'm in no way trying to claim people in these positions aren't doing well, but they do not automatically qualify as wealthy. they may well be, but they may not. more than likely they will be doing well for themselves, but not necessarily.
and 50k for a 1m pot sounds better than I thought, annuity rates are improving with interest rates.
there is a movement called FIRE which is worth doing a bit of reading on. all about how much you need to "check out" all sorts of interesting viewpoints
You can see here, on income alone £50k is in the top 5% of the UK:
https://ifs.org.uk/tools_and_resources/where_do_you_fit_in#tool-results-section(and a quote when you put in £50k income is:
In conclusion, Your income is so high that you lie beyond the far right hand side of the chart.
Pedant mode... you need to enter net amount into that calculator. Then (using 2K for council tax), it states you have a higher income than around 67% of the population
I'd imagine index linked pension pots which go up with inflation could get dragged towards that 1m much faster than expected too
again showing how good defined benefit or career average pensions really are
a more useful measure is disposable income rather than pretty silly binary measure of income.
My bad, I should have factored in the mortgage on a £600k house, the PCP on a Range Rover and Portia's school fees....
😉
I’d hazard a guess TJ if you took all your assets and calculated your total worth then deducted your essential outgoings would probably be surprised to find out how well off you are compared to the average.
He did it earlier up this thread, so I don't think he would be.
It’s crazy to convert a pension to annuity income and then claim that because of the amount of income, it doesn’t make you rich.
If you had a £1m property portfolio, which “only” generated £40k p.a. in rental income, you’re still rich
Once you convert the pension into an annuity it’s gone and becomes income. Property you can always sell and get your £1M back.
In all honesty if people think £50k a year before tax makes you rich you need to get out more.
I’d hazard a guess TJ if you took all your assets and calculated your total worth then deducted your essential outgoings would probably be surprised to find out how well off you are compared to the average.
I am happy to say I am way way wealthier than the median in the UK - and yet have a quarter of the assets that some of you are claiming means you are 'not rich'....
*sigh* take a look at FIRE
very few fit the bill of maxing every thing out on cars and school fees, yes there defintely are some.
as much as I can see why you may think that, it just comes across as plain jealousy. Those will be the first that will really feel the pinch when the interest rates rises really kick in. Which I'm sure some will delight in.
the people who are truely rich, don't have mortgages or PCP, they don't even need to work...or if they do have debt its a tool to leverage investments / reduce their tax burdens
In all honesty if people think £50k a year doesn't make you rich you need to get out more.
Once you convert the pension into an annuity it’s gone and becomes income.
Yes and no.
You buy an annuity. The annuity is an asset. The asset gives you an income.
The asset is still "worth" whatever you paid for it and forms part of your net worth.
I’d hazard a guess TJ if you took all your assets and calculated your total worth then deducted your essential outgoings would probably be surprised to find out how well off you are compared to the average.
Asset rich and income poor
total assets worth around 3/4 of a million. Income without working of £15000 pa. essential outgoings around £4000 pa ( council tax, insurance and energy bills) I know I am rich.
Enough money saved that you can live off for the rest of your life = comfortable
Enough money saved that you can live off the interest for the rest of your life = rich
Enough money saved that you can live off the interest generated by the intertest = now we're talking
Enough money saved that you can live off for the rest of your life = comfortable
unobtainable for the vast majority of the population
as much as I can see why you may think that, it just comes across as plain jealousy. Those will be the first that will really feel the pinch when the interest rates rises really kick in. Which I’m sure some will delight in.
I think for me it is about recognising the place of privilege and ability to make decisions about life that money brings. To deny that the levels of resources / wealth that some people have is to deny that position of privilege - and so not be aware of the position those who don't have it are in.
I hope it is not jealousy, it is not intended as such.
To go back to this thread: for me it is about a system that seems to have a) a huge and unfair 'hiccup' built in and b) that as a matter of principle, I do not think we need to support (via tax and other systems) those who have significantly more wealth or income than the median.
If you had a £1m property portfolio, which “only” generated £40k p.a. in rental income, you’re still rich.
I can sell the property portfolio, I can't sell (the majority) of my pensions.
In all honesty if people think £50k a year doesn’t make you rich you need to get out more.
You think £50k (gross) income makes you rich - just how little income do you have?
In all honesty if people think £50k a year doesn’t make you rich you need to get out more.
when you get there, turns out the higher rate taxpayer streets aren't actually paved with gold...
ps. richer than others doesn't equal rich.