Would you class this family as average, comfortable or well off?

[Greyorcream]

Curious what people would class as “well off” these days?

Couple in late 30s with 2 dc (late primary/early secondary age). Not in London.
Partner A earns £52k and Partner B earns £74k. So fairly average wage. Neither majorly stressful roles. Both work full time. Home by 5 each evening. Both can wfh 2 days a week.

Both get annual bonuses of around 8% and usually salary increases of about 4% each year.

Mortgage outstanding is £339k on a house worth around £500k (5-bedroom house).

Pension contributions (employee + employer combined):

• Partner A: 17% (this will be increasing)
• Partner B: 21%

Savings:
usually save a third of income each month.

• £130k joint savings
• £40k saved separately for the dc.

No inheritance or family help received. No loans, car finance, credit card debt or student loans.
No childcare or private school costs.
Lifestyle-wise, usually one big family holiday a year plus a couple of weekends away.

Would you consider this comfortably well off, average, affluent, or something else? Genuinely interested as perceptions seem wildly different depending on area and social circle.

Comfortable. You have amazing savings which are very high compared to your more modest/ just above average salaries.

out of interest - what are you saving for?

I think you are doing great. Not massive work stress and you are home at a good time for your children plus you have savings.

Does your father want you working 12 hour days and be close to breakdown with stress?

,I think your mortgage is high compared to the value of your house. I would be looking to increase payments or pay off a lump sum when your fixed rate expires.*

Sigh. If she is getting a higher interest rate on her saving thaan her mortgage or her savings are in S&S then it makes no sense to pay off her mortgage early. It's all about the diferences in the interest rates. For example, the best high interest cash ISA pay 4.7 % but you can get mortgages with interest rates below 4%. So putting the money in the ISA gives you more money and more flexibility.

I’m a compliance director earning 200k. My direct reports earn around 100k + bonus and their direct reports earn around 70k + bonus.

The salaries quoted by OP are easily achievable in relatively junior compliance management positions.

None of the team work anything other than standard hours Mon - Fri and most WFH.

The scenario outlined by OP is very typical for compliance roles in many industries as we move towards ever increasing levels of regulation both in the UK and globally.

I think to have £130k savings and able to save one third of monthly income whilst also having a £330k mortgage is very impressive.

Particularly on those salaries, which are decent but not high.

I thought our £60k of savings was a good cushion but we don’t save anywhere near that each month and have greater income and a smaller mortgage.

Because stock markets never crash. 2008 never happened. The UK economy isn't in sh## Street. The bond markets aren't going crackers - which will affect mortgage rates. Unemployment isn't rising. Interest rates on cash isas aren't falling. Property isn't the greatest asset.
And we're all living in cloud cuckoo land.
Yes. Op should have 6 months expenses saved in case of redundancy. She should have emergency/ short term savings in cash and a bit extra in stocks and shares for the long term.
However, 80% gearing on her mortgage, in my opinion, is a lot. I wouldn't be comfortable with 400k of debt. My mortgage was paid off in my 40s and I didn't earn fantastic money.
Then we set to work saving, investing, buying better cars and having better holidays.
Different priorities I suppose.

It is a really good idea to overpay on your mortgage if at all possible. When my DH had a stroke at 40 and got made redundant in the same week (nice boss!) we would have probably lost the house had we not been ahead with payments. Fortunately he was able to return to work before we got behind by more than a month.

yes we overpay by about 300 per month

Surely it depends on interest rates? Overlaying a mortgage can be a poor decision if you can get good investment an savings rates

I see that as affluent. Very good amount of savings, and I can imagine you can pay bills easily as well as have luxuries. The salaries sound above average to me.
DP and I pay ourselves £26k each, so £4k pm pre-tax. Our monthly expenditure on essentials is around £1300 (mortgage is paid off, but it was £314 pm when we finished paying it) so we have a healthy amount for luxuries and savings. I feel like we're on a comfortable wage, we don't want for anything.

Well off. But why don’t they pay off more of the mortgage with the savings? You don’t need that much of a buffer🤷‍♀️

Need to wait for the fixed term to end.

Yes. At least, to the extent they can be as household income is always a bit of an estimate. Fairly sure the figures were post tax and benefits, because that’s what I normally look for, but I was rushing so not 100%. From ONS and analysis done on ONS data so easy to look up, but from a computer, I’m currently on my phone! London has big differences between richest boroughs and poorest.

Posts like this really make me miss the laugh reaction on MN 😂

They are doing fine in terms of income and liquidity. And that may be what matters to them, in which case congratulations.

In terms of wealth, so-so. It would be good to know a bit more about the pensions, are they defined benefit or defined contribution?

The "Millionaire Next Door" rule of thumb for wealth is to calculate your expected net worth by multiplying your age by your realized pre-tax annual income (excluding inheritance) and dividing by 10.

By that method, a couple aged 35 earning £130K might be expected to have net wealth of around £500K. There's, what, £300K in the bank and house equity. If there's another £200K in the pensions, they are on track.

In the real world- Well off

But in the world of mumsnet- below average

Both defined contribution pensions

The comparison I gave was cash ISA 4.7% vs mortgage rate below 4%. The savings can be used to pay off the mortgage at the point the mortgage becomes problematic. The OP is well on her way to having more savings than debt but she also has a good chunk of equity in her house, that plus her savings would buy an average sized house outright.

S&S are always the best savings option long term but even cash savings can beat mortgage rates. Prioritising overpaying your mortgage rather than building savings with higher interest ratesis not the sensible financial choice. You should be saving and paying off the mortgage at the same time.

Why are you on here asking?! You know the answer.

Your mortgage is high in relation to house value, otherwise quite good...

And approx 20% contribution rate. So around £25K per year. Pensions probably worth around £200 - £300K?

So adding it all up, I think you have net assets of around £550K - £650K.

Nice place to be, you are quite well off by UK standards.

In 2022, median household wealth in Great Britain was £294K (according to the office for national statistics).

The wealthiest 10% of households had household wealth of £1,200,500 or more, while the least wealthy 10% had £16,500 or less.

Affluent for sure.

Teach your grandmother to suck eggs. The best loan to value rate is 75% for a ten year mortgage. The OP just about meets that loan to value rate. They have £161k equity in their home. That is not a lot of equity. If the worst happened they couldn't buy much for 161k, especially after paying estate agents, solicitors removal fees etc.
You are obviously more comfortable with a lot of debt, which I am not. Do you have qualifications in Personal finance? Which I do. I also have life experience. I remember the days of negative equity. Luckily, it never applied to me but I remember families losing their homes and posting their keys to their mortgagees. It didn't stop them from owing the money.
Pick up a newspaper, any newspaper. Read the business pages. Read the Economy pages. Read the redundancies happening. Look at the inflation rate. Look at the Bond markets - they rate this government as worse than Liz Truss. GDP is at a very low level. We are heading for a recession, with higher inflation and higher redundancies. Together with a new Prime Minister who say the bond markets.

Our fixed term is up next year, the plan is that will pay off a minimum of 120 by then. We currently save about 2k per month.

Seeing as the average salary age 35 is £2600/£2700 a month, to be able to save £2k a month into pension really does point out how hugely well off you are. If you see one of my earlier posts, you are in richest 10% of the UK.