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's always fascinating to see how closely out experiences align with what's happening nationally

And don't forget pensioner household. About 20% of the population is over 65.

Many of those will have very low income, even if they have housing assets.

They specifically say that the graph cuts off past a certain figure so that the highest incomes don't distort the picture. Also yes, an income such as yours is very high compared to most.

To be in the top 6% you must have a net household income of £9k a month. Assuming three children.

Surely you realise that £9k net is an enormous amount.

Or are you putting in your gross salaries rather than net?

This.

Except they aren’t, and you must have done it wrong. Mine came out as top 14% and our joint gross income is £110k…

Oh really? I didn't know that.

You must both be earning around £80k each to be able to in that bracket.

But if you keep child benefit you must both earn less than £50k.

So you've done something wrong

Mine came out as top 9% and our joint gross income is about 90k, so I think it might be you who's done it wrong... I ran the figures for two incomes of 35k gross and also got top 15%.

Depends om number and age of dependents

Because you need to put the net income in not the gross - I think a gross income of 2 x 35k would be around £4,000 net which comes out as top 61% and sounds about right to me. Appreciate people have different pension contributions, council tax etc though.

£4,000 net per month that should say…

Fair enough. If someone asked me what the top 5% of the country had as a household income I’d be thinking high 6 figures. I always figured we were pretty well off due to having an above average income in a cheap area but never thought we would be on relatively that high an income when we are up north & earn significantly less for the same roles than we’d expect to around London.

We are clearly in more of a bubble than we realise

Do people understand the difference between gross & net?!

Is that a typo, 61%? I did put the net income in. Gross income of 2 x 35k would be approx take home of £4500 according to the Reed tax calculator, so top 15%ish assuming no kids, which is what OP said.

Apparently I’m better off than 31% of the population. Which is higher than I thought as a working single parent.

We have no dependants now and are at 91% better off than the rest of the country. I’m not surprised, the very top couple of % will be people like DH friends who work in the city and really do earn eye watering amounts of money.

So many people struggle to grasp societal concepts because of their own narrow experience. Almost all my friends are like ourselves, well off because they are the people we met at University, through our careers and neighbours that can afford to live in the very nice road we reside in . It’s very obvious that peoples lives can be very different. DH has always had quite a privileged life but it was not my experience. What has been difficult for me was seeing my sisters remain in our home town doing poorly paid work, my sisters were carers in nursing homes. They both have issues with their backs now, they are a lot older than me and just retired and their lives are a world apart from mine.

@whatkatydid2013 how can you claim chills benefit as you need a high income post tax to be in the 94%

I think so many people on mn are unaware if their wealth and that's why calculators like this and threads like this are so important

People socialise with "people like them" and start to feel a certain level of living is "normal."

But no, 2 full time decent salaries isn't at all "normal" for a lot of the population and I think if this helps people to see that it is a good thing.

It affects so many peoples outlook o. What is affordable. What parents "should" be doing, what's normal living - that if you realise you're in the top 10% of earners it's a light bulb moment that people simply can't make the same choices/way of life.

And yes what Ancient water says entirely.

We've been the other side of the coin. Good university degrees but a mixture of ill health and life circumstances mean we aren't in that "circle" and are so aware of how that gap has grown between us amd those that did well/uni friends as time has gone on.

So either you are earning £9k net a month, which is a massive amount.

Or you misunderstood the calculator and did net rather than gross

I'm so confused about how you can claim child benefit though

It's because the figure used for CB eligibility excludes your pension contributions. If someone who gets paid over 60k puts enough of their wage into a pension to go below 50k after it's deducted, they can claim full child benefit, or partial child benefit if it's between 50 and 60k.

You can only put a max of 40k into your pension every year at the mo, or 100% of your wage if you earn less, but other than that, you can do what you like. In this instance, OP says she puts a lot into hers so that's how someone can have a much higher salary than the 60k limit and still be on full or partial CB. In practice, I think there comes a point lower than the 40k maximum where most people would rather just have the money and lose the CB, but different strokes for different folks etc.

So two gross incomes of £50k ( to keep all child benefit) is a net income of about £6400 a month.

Which puts that household is in the top 13%.

If someone asked me what the top 5% of the country had as a household income I’d be thinking high 6 figures.

So you thought one in 20 houses in the country have a net income above half a million?