'Middle class earners' - struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000- Guardian

[fluffykittens208]

https://www.theguardian.com/business/2024/mar/04/middle-class-workers-mortgages-bills-tax

Excerpts:

'Scott was just one of scores of middle-class earners who shared with the Guardian how they are struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000.
A report last month from the abrdn Financial Fairness Trust highlighted how Britain’s insecure jobs market and high housing costs are leading to the growth of a precarious middle class. These households are struggling to maintain a decent living standard on joint incomes as high as £60,000 a year. That compares with the median gross annual earnings for full-time employees of £34,963 last April.'

“It does seem that the only way to be on a middle income and doing OK at the moment is to be a Dink and living in the north.”

'Although respondents with children reported more precarious finances than those without, millennial childless couples say they barely have any disposable income either.'

Personally we am coping ok with a household income of £120k and still eat out/have a lot of city breaks, but I wonder if that is only because of our specific circumstances

1. small 2 bed flat in zone 3 London so we don't have a car and where it is possible for DH to cycle to work. Would probably always stay in a flat even if income doubles so it makes more sense to stay in zone 3 if living in a flat.
2. were able to live at DH's mum for 3 years while working in London and bought in 2019. We were able to overpay a mortgage on 2% interest during the pandemic and plough our pandemic savings into it which means the new mortgage rate isn't as painful.
3. fertility problems so we are still DINKY and unlikely to have more than 1 child (am already 32 this year).

As a disclaimer i don't think the chancellor should cut taxes despite us all feeling the cost of living crisis as 40% of tax revenue comes from NI and income taxes so if they cut taxes, they would have to cut services and I have no desire to pay for healthcare privately in my old age.

But it feels very strange to read about people struggling in the news on our household income, probably means that the income threshold to be 'comfortable' (without very specific circumstances that lower your cost of livin) is much higher! Would hazard around £150k to £250k now. Basically we are going to be a hugely unequal society where only the top 5% can expect all the middle class fixtures and the rest of us have to pick and choose or live a life of penury and no luxuries i.e. car or property in expensive location; 2 children and no savings or 1 child and savings. Far luckier than those in the bottom 50% obviously but i am not sure how you can say you are middle class when the only reason you can afford to eat out and have nice holidays is cos you purposefully cut back on things people used to expect if you were doing semi well i.e. 2 kids in a suburban semi and a car on the driveway.

You conveniently forgot their wages were a lot lower as well.

Lenders won't tell you, therefore you need to be alert that interest rates could double, triple or even quadruple. Never say never is my motto

Employers are now required to have a pension scheme with employer contributions.

And NHS (and as far as I know, all other public sector employees) you pay towards your pension. I'm actually only paying a 6% a month contribution in private sector, compared to the 9% I was paying in the NHS

Of course it does.

But you just can’t afford to live there doing those jobs unless you claim universal credit on top.

And even then, even if you work there is so much snobbery from estate agents and landlords are reluctant to rent to you.

We did those jobs (well, dh actually worked in finance for a LA, but local authority pay is shit), and I was a healthcare assistant.

Our landlord, who we had to jump through hoops for as in his words, he needed us to prove we weren’t “benefits scum” (nice!), decided to raise the rent two years in. No one else would rent to us because of HB top up. I was laughed out of so many estate agents and spoken to like shit.

It was leave London, or wait to be evicted and be put up in a Travelodge or other temporary accommodation for years. we didn’t want to put our children through that. So we had to move 150 miles away where we could afford to rent, and then buy, with no benefit top ups. I had just turned 40 and was sick to death of it.

It’s really bloody difficult to stay in London on a low wage, especially with children.

1. If you’re on a lower income, please state your adjusted income taking into account free childcare and any benefits. Then compare your income with these middle earners, and I don’t think they look like such a cosy ride then?
2. I think the real issue is that often these middle earners have really sacrificed to climb the career ladder; extra training, rationalising the number of children they have, often missing family commitments for work, constantly trying to reach the next target etc. And now it’s like : ‘what for?’ There a creeping tax burden and the financial benefits just aren’t there any more. They’re contibuting to a broken system from which they’re not getting anything back (NHS, schools, social infrastructure) and the social contract is gone.

Limited sympathy on mortgages. Rock bottom rates and stagnant wages mean you should think ahead. Maxing yourself out on a long term debt is a big risk if it's all you have.

Maxing yourself out for a home brings a risk. You can see a lot of homes where people have got burnt.

Don't have a huge house at all, we had to convert a 2 bed to fit our 2 DC. We need a house to live in so can't sell the house.

I'm not doing to itemise our household income and outgoings on MN. Food is loads as I have a 17 year old DS and 13 year old. Energy up 200 a month, massive mortgage, savings now for DS uni. Pensions not recent pretty b

I’m wondering too

@Goldenbear if you don’t have childcare costs, or many holidays and the rest how much is your mortgage?

I think the real issue is that often these middle earners have really sacrificed to climb the career ladder; extra training, rationalising the number of children they have, often missing family commitments for work, constantly trying to reach the next target etc. And now it’s like : ‘what for?’ There a creeping tax burden and the financial benefits just aren’t there any more. They’re contibuting to a broken system from which they’re not getting anything back (NHS, schools, social infrastructure) and the social contract is gone.

Not only that but they’re held in absolute contempt by everyone else, to the very rich they’re plebs, to the working classes they’re little England ‘Karen’ types who should shut up and carry on paying for everything…

50k wage. I work in London but live 90 minutes away by train to be able to afford a small 2 bed semi. Mortgage now about £1400. Train £600. That’s before anything else. I’m a key worker too, if I leave London and nobody fills my post, the hospital suffers for it. It’s really decent money. It’s insanity that it’s a struggle.

Mid £90k income and no savings, I can only assuming you are blowing your money then. Again, not struggling.

I think a big factor is how that £60-120k is split and what comes off your salary.

We earn around 50k each and anything above goes in additional pension or we take family care leave so we retain child benefit. Non contributory final salary pensions and we already paid off student loans as we are in our 40s and had the smallest ones going.

Monthly net income is a little over £6.6k

I know a couple in the extended family who are about 15 years younger (so late 20s/early 30s). They have massive student loans & no non contributory pension. He is on 75k and she’s on £25 for a 3 day week. They don’t get child benefit. She’s stalled career a bit having kids in 20s and going part time but has good reason for it

Their monthly net income is around £5.6k

We live in a 5 bed terrace When we bought our house it was £275k and even with extra borrowing to extend it and improve it our mortgage is £1.3k on a long term fixed rate.

Their house (bought later) is a tiny 2 bed terrace (in central London to be fair) and was close to £500k. Their mortgage is £2.3k on a shorter and more expensive fixed rate (went up a lot when they renewed).

Our kids are done with nursery and childcare costs are maybe £300/month over the year including wrap around and holiday cover, which we need less of as I take some unpaid leave and have parents to help.

They have 1 at school and 1 in nursery and their costs are currently £1k/month for 3 days and it’s only that cheap as it’s subsidised childcare.

So after housing/childcare on same basic income we have double the disposable income they do. Biggest difference is we are older so cheaper house/smaller loan.

We know their finances in some detail as we helped with a tax matter recently where normally I’d have no clue about someone else’s money.

Anyway knowing that it doesn’t surprise me at all that while some people are very comfortable on a £100k income others struggle more. While some people undoubtedly it’s down to overextending for a lot it’s more that the same house costs a lot more now than 10 or 20
years back relative to incomes. Even my relative is lucky that they inherited money for a deposit or they couldn’t have bought in London at all for years. Renting is astronomical.

In our part of the country £100k is a significant family income and it will give you a lot of options. In some other parts I think you may still struggle at times (particularly when you have young kids). Obviously you’ll be better off than you would be on a much lower income in the mid-long term but it may be that short term, while both families have younger kids, you have no more disposable income than someone on a very low income.

On an individual level if you are on that kind of salary moaning about your situation suggests of a lack of awareness of how things are for people on the lowest incomes and it would be diplomatic to stick to discussing with friends in similar circumstances. On a society level everyone should be a bit worried if nurses, teachers, police etc who will often be aspiring to get to that level of income as they move into leadership roles are going to end up feeling like large areas of the country are unaffordable to live in.

The problem is the rapid debasement of money over the last 15 years, but no one is talking about that.

2008 crash, the taper tantrum of 2013 and then covid and the vast billions that were spent to 'support the banks' or 'support the stockmarket' - most of this extra money that was given away by government on our behalf and is now part of our future taxes we must repay, has gone into the coffers of the super-rich. They have all become far more wealthy.

In the meantime, the cost of bread, eggs and milk etc has doubled since 2008, yet salaries do not keep up.

The reason why the middle classes are feeling stretched is because they are in the same boat as everyone else - the 99.5% who are not part of the super-rich.

https://www.oxfam.org/en/press-releases/richest-1-bag-nearly-twice-much-wealth-rest-world-put-together-over-past-two-years

The public purse is empty while the private purse (personal wealth) for the 0.5% has gone from strength to strength.

The only answer is a tax on the 0.5% but who is going to vote for that.

It's like turkeys voting for Christmas because most people in power (ie, Sunak, Johnson, even Starmer) are already in the 0.5%.

We need a revolution. How it hasn't come, I don't know because what is going on is grossly unfair and has been for many years.

Do you mind me asking what benefits you receive eg tax credits and housing benefit or universal credit for the 3 children? Just wondering how you survive on 20k

top 30% pay 90% of the income taxes/NI. Income taxes/NI are 46% of overall tax revenue in the UK. top 30% is an income of around 45k or so.

Without this income group, there is no British state. no money to even turn the lights on.

@whatkatydid2014 - exactly! I have neighbours who are earning towards 200k. I am half that. But I bought my house ten years earlier and my children are out of childcare needs. I am not struggling, but my neighbours need two incomes to get near my "lifestyle". In London it does matter if and when you bought a property

I find it hard to imagine, as I'm on around £24,000 (including top up benefits and child benefit) and feel I'm living comfortably, certainly far more comfortably than during my childhood, when hot water and meals were often scarce.

We have an air bnb holiday in the UK each year, trips away to visit family around the UK, can afford a cheap holiday in the sun once maybe every two years, can pay all bills and go to restaurants, on outings etc., in London so no car. So £50,000 for a family of four sounds good to me, childcare aside.

I'm assuming cars, high mortgages and childcare costs are the issue. Some could be extra lifestyle choices, some are definitely unavoidable costs.

I think everyone is feeling the squeeze given recent increases in prices (especially mortgages and childcare) and limited wage growth.

We're in that bracket - I earn approx £80k per year working part time and DH has taken early retirement on a pension of £30k. We live in zone 5 - close to where I grew up. But our outgoings are very low comparatively both through fortune and frugality - mortgage overpaid for many years and now paid off, children don't need childcare but not at uni yet, not big on holidays or eating out. We still save a lot for the future - especially since we stopped paying for childcare.

But I never thought I would earn this much so never had expectations of having a lifestyle much different to this. I grew up on free school meals despite having two working parents. The fact that I own my own home is incredible even if it's a reasonably small terraced house.

On the flip side, I look at older colleagues who managed to buy large houses in smart parts of London at the same stage in their careers. Money certainly seemed to go further - especially in terms of house buying - in the past.

That poster who's rent is only 300 is very rare. My income is also less than 20k and my rent is 700 a month for a one bedroom apartment my kids share a room with me. Landlord is looking to sell and if he does I'll be screwed because rent has really increased in my area and it's now about a grand just for a small one bedroom apartment.
So forgive me if I don't believe someone who earns 60-120 k is "skint" .

I'm not looking for sympathy btw just had to say something so y'all didn't think it was common for someone to only pay 300 a month for rent

This so much depends on where you live and how much mortgage you have. In addition, if you mix with wealthy people, it will drive up your own expectations of what is normal.

I know bankers on way over £250k who genuinely struggle when they don’t get a significant bonus. They have big mortgages, private schooling, cleaners, lots of extra curricular etc.

There is a basic level that we all need to live on. Above that, you kind of get used to certain things and struggle without them.

That's absolutely insane. That's just crackers. You are spot on saying that. What is happening to the UK?

How can it make more sense for someone earning £70k+ to drop to two days a week!

isn't it better to talk about it on a public forum so we all know that its not just the poor who feel squeezed but also people they may consider 'rich'.

if the middle class is in decline, then this means worse things for those on lower incomes.

Does that cover private schools?

I agree it depends when you bought but private is ££

True

The whole get them concerns me. We need those tax receipts

If you live a £120k lifestyle on £100k then you are going to struggle.

Live an £80k lifestyle on £100k then there isn't an issue.

COL has affected everyone in it's own way...whether it be only going on one expensive holiday abroad rather than two, or only heating the house for an hour an day..it's still a ' cut back' technically.

The issue is that poorer people /low income families like me have is with all these threads with people moaning about having to tap into their £50k savings to ' survive' . Posters that have no sense of hardship whatsoever.

@EasternStandard - it certainly does!