To think there is something weird with how this ifs household income calculator is set up?

[whatkatydid2013]

https://ifs.org.uk/tools_and_resources/where_do_you_fit_in#tool-results-section

You can use the above website to get an idea where your household "fits" in terms of income vs average household in the UK. Essentially it takes:

Net earnings (wage or salary income, benefits you receive, income from savings and investment, profits or losses from self-employment, and any other sources of income) less your council tax & gives you an answer.

I put our details in and it has our household in the top 6% yet OH and I both earn well under 6 figures and, after pension contributions, we are entitled to claim child benefit. If we didn't have the kids then even without the benefit we'd be top 3% of households.

I think we are reasonably well off but surely there are enough people who are independently wealthy &/or have 6/7 figure salaries that no one with normal jobs/wages fits in the top 5%? If it's accurate then just how concentrated does that make wealth in the top 1% or less?

It assesses income, not wealth. Don't confuse the two!

Also check you haven't done anything daft like put your CT as yearly when you meant monthly etc.

I’m in the bottom 19%, better than I expected to be honest

So after you squirrel away lots in your pension you are each on almost 50 k with around 6.2 going into your bank each month

Yes that is really quite a lot compared to most people

Did you add your income after tax or before tax?

There was another thread about this just yesterday.

I put our details in and it has our household in the top 6% yet OH and I both earn well under 6 figures.

If your household income is well under 6 figures then you're using the calculator wrong. Are you putting in net income?

It does seem weird - the median weekly household income is £900 on the graph - that’s (very roughly) around £35k - but surely most UK households are two income households? And the average salary is 35k? So wouldn’t median income be closer to 2x35k?

I just put 70k household income in the tool and was top 15% of population - but that’s just 2 x average salary.

You have to put in net amounts?

For 2 teens 2 adults it tells me you need 7k a month post tax to be in top 6%. That's clearly a massive income. People always seem to think someone else is wealthy and don't see when they are.

I think these things are very useful and should be done more so people appreciate what they have. Most people can't afford to put into pensions, have big mortgages etc.. we're surviving and hoping we can afford food before payday.

It depends on your dependants. If I put in our whole family, we are at 89%, if I do just me and the kids it's mid 70s, if I do just me it's 93%. Conclusion, the kids and DH are the thing standing in my way to wealth 😁

91% of people are better off on income

You’ve highlighted the big anomaly there - tax. You are earning a decent sealer between you, yet won’t be as heavily penalised by tax as one 6 figure earner - you also get child benefit. I do believe 100% this is possible.

Yes. Our situation is a bit odd as I have a final salary pension that I don’t contribute to but work does on my behalf (& reports on it). I can’t choose to have the money instead but obviously it is valuable. My OH pointed out for a fair comparison I needed to add back the pension contribution from work. It’s around £16-18k a year. Also a chunk is share dividends/interest that we just reinvest so I guess we don’t really think of it as income.

Don’t get me wrong I’m not operating under the illusion we have a low income but I just thought we were top quarter ish & it surprised me since the calculator is also meant to consider unearned income, we know so many people who are senior to me at work and clearly earn more & similar roles advertised in the south for similar roles always seem to be for a lot more salary.

And a lot more tax.

If you’re earning £7k per month post tax between 2 adults then I think at least one of you definitely earns above the child benefit threshold…

It sounds like you work in a very well paid industry and put aside a chunk of your income in savings. Some families have inly one big earner, which is relevant but I guess the take home message is not just to look at a highly wealthy section of society and compare yourself only to that.

People tend to mix with others of a similar status or look at their colleagues and then see those figures as normal but there are a lot more people on low incomes than many people think.

As a household we were on around £26k last year (dp full time and me part time). DP has 2 sisters who are single parents on low wages working part time. One of his brothers has a household with one full time worker, again on a low wage. The partner looks after the children. His other brother is the highest earner but still not anywhere near £50k.

If all the siblings pooled their wages I would esimate it to be less than 100k combined.

@mosiacmaker This calculator works on income after tax, national insurance and council tax.

C. £35k is the median full-time income BEFORE those.

Not all households have two full-time wage earning adults, so the median is a bit lower than two full-time wages anyway.

OP - yes, it sounds like your household income is very high compared to everyone in the country.

But remember that this chart is only for people who pay some income tax, which removes some groups (including some of the very wealthy).

The average household doesn't consist of two full time salaries. Lots of households have part time salaries or only one salary coming in.

Stats on "median" salaries don't include all the people who earn 0 either. So the actual average per person would be lower

I always sort of assume that outside of years you have youngish kids most households would have 2 working adults. Based on this two working adults on median salary without kids are up in top 15%.

77% of working age adults adults who work work full time

Around 20% if the population are above normal working age

So that's around 40% if the uk adult population not workin full time

Millions of people are earning less than the median salary.

Millions of people are earning minimum wage.

So even if they are 2 adults working full time their household income will be less than £40k.

Very few people, as a proportion of the population, have shares or savings which provide them with an income.

Clearly I’m totally wrong in my assumption that most families have two adults that work at least close to full time for majority of their working lives. If they did then two people earning median salaries couldn’t be anything like that well off vs an average household.