'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.

Free school meals are for those earning £7400 if on UC.

Given that legacy benefits are being phased out this year this is a v low threshold.

Who is eligible for free school meals?
Free school meals are available to pupils in receipt of, or whose parents are in receipt of, one or more of the following benefits:
• Universal Credit (provided you have an annual net earned income of no more than £7,400, as assessed by earnings from up to three of your most recent assessment periods)
• Income Support
• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• Support under Part VI of the Immigration and Asylum Act 1999
• The guarantee element of Pension Credit
• Child Tax Credit (provided you’re not also entitled to Working Tax Credit and have
an annual gross income of no more than £16,190)
• Working Tax Credit run-on – paid for four weeks after you stop qualifying for
Working Tax Credit
In addition, the following pupi

How much are you paying in nursery fees?

£70k after tax = £4k/m

£1,500 mortgage

That’s £2,500 for two sets of nursery fees + all living costs?

What’s the breakdown of nursery costs? £2,500 barely covers one in my area.

Also 3 under 4 as a single parent… hats off.

People who are on minium wage won't be paying anywhere near as much tax as someone on £60k, they are more likely to get council housing (not free, not brilliant, but not wild rents either), more likely to get top up benefits and child benefit and free school meals

But someone in a £60k job has the stress and responsibility of that. Usually means "work the hours required to do your job" so long hours, unpaid overtime.

The whole picture needs looked at not just income.

I think about it differently.. I think highlighting how the government has failed people on £120k shows how the tories are making everyone without inherited wealth poorer. It may mean even wealthy established people in their 60s and 70s (the tory voter base) realize their intelligent grandson with a degree from Cambridge is going to have a tough time without a hand out from bank of grandma and grandpa. Posters like Xenia have 5 children, lets say she ultimately has 10 grandchildren, is she going to gift a deposit to all 10 of them? Even if she had the money does she want to!? What about the care home fees.

Hopefully they would realize that whether we are on 20k or 60k or £120k we are all in the same boat and some of us actually do believe each generation should be able to pay for itself.

People earning £60k+ are in the precarious position of possibly losing their job, as the majority of jobs pay less than this so chances are, if they lose their job they'd have to take one with lower pay and their outgoings might be too high. That aside, it is hardly a measley sumnwhen you consider the median salary is 33k, it is almost double that.

My daughter is earning about £35K and her daughter’s child care fees are £900 per month and she is paying £1200 rent …she is literally left with about £300 for her food and bills !

People who are on minium wage won't be paying anywhere near as much tax as someone on £60k, they are more likely to get council housing

There is no social housing. I earned a lot more than £60k at one point and I can tell you the stress and responsibilities of trying to make ends meet on a tiny income caused me a lot more sleepless nights than any job ever has.

In theory, yes but in reality everybody living in London is living there for a reason (job, uni) and cannot move somewhere else.

@1960swhatshappened

then you should be empathetic with the problem as your daughter is experiencing it.

Not quite.

£33k after tax, assuming no student loan and child benefit x 2 = £2,313 a month

£60k after tax, student loan, not eligible for child benefit = £3,322 a month.

So that extra £27k headline rate, almost doubly the salary, adds £1,007 a month to their income.

A 50% increase in take home pay, not an almost 100% increase as one might expect.

But you are falling into the trap of pitting against each other, that's the deflection that's what the wealthy want.

Not RTFT in full, but living in a house with no mortgage/rent, no childcare anymore (just after school activities) and 1 full time wages, 1 part time wage & external income from side jobs, we are no way near as comfortable as we used to be.
The main increases in our costs have been due to insurance increases, food and fuel cost increases when much have had a massive impact on our finances.

But you do get that people can have an intelligent grandson with a degree from Cambridge who is still not earning 60k?

And yes, of course, people can give a deposit to 10 grandchildren, and people do.

We are not all in the same boat. This is a fiction the current government would really like to have us believe.

I think people are purposefully misunderstanding, we earn in this category. After childcare and our mortgage for our average 3 bed semi in the West Midlands we are left with £1,800 per month. The same as somebody earning around £25,000.

A family like ours, two adults and two children, with one adult earning £25k and the other staying home is entitled to (according to the benefit calculator) £293.57 a week in universal credit and child benefit. In that £1,200 you’d have to pay rent to be on an even level but you can rent a three bed terrace here for £800.

So that family already has a higher disposable income than we do, despite us earning nearly £100k. Last year DH earnt a lot less and I didn’t work, with UC we were better off. Obviously in a few years childcare will be over and I hope to have qualified and be earning more, it doesn’t make it any easier in this moment though.

That’s horrendously expensive

But, forgive me if I'm missing something - surely, you are paying quite a good contribution to your pension? And surely, as you say, childcare is a flash in the pan, so a very small part of your working life?

I don't want to pit anyone against anyone, but the wealthy - including those on 120k - must accept some responsibility.

Yes, my parents say this all the time about my DS, i mean they are both left leaning but they don't know why the winter fuel payment isn't means tested. My Dad was well off but now isn't and is surprised at how little rent he has to pay when there are young people on the streets with nowhere to live.

People earning £120000 with no asset wealth is not where you should be aiming your upset towards, they don't have property portfolios, they are not getting rich on boom and bust economies, they don't have any concerns about wage stagnation and food inflation. There is no trickle down economy from the very wealthy., it is not sustainable.

So £1800 is actually very comfortable.

So I earn around this-take home is actually £4600 after private pension contributions, dental, medical cover etc. I paid £41k in income tax last year. My partner brings home £1600. Which gives us a (on paper) healthy household income. We have 3 small children.

Then deducting nursery (£1400), wrap around/holiday childcare x2 (£900) (not
eligible for tax free childcare), mortgage (£1000), utilities including phone/internet (£400-we are off grid for heating fuel so more expensive), insurances (£300), car fuel (£300-2 cars, owned outright, not flashy), food shop (£600-800), our one genuine luxury is a £150 membership to a sports club which we use to take the kids weekly swimming/sports to (our local council pool would be about £20/visit for just the pool).

I attempt to save £500 a month and my DP £200 in rainy day/holiday/future university funds but this varies depending on whether there’s kids activities to pay (they do 2 sports a week-tennis & football with local clubs nothing fancy) clothes to buy (I shop primarily on vinted), shoes etc, house stuff… So that’s our regular outgoings around the £6k mark.

We have been abroad once since 2017 which was last year and we did do an all inclusive hotel which was a pretty big deal for us. This year the holiday fund has been obliterated by an unexpected £4.5k tax bill (despite PAYE!!) because I fell into the 60% bracket. Otherwise we have local long weekends away and we camp! Which the kids do love but it’s not what I thought I’d be doing as a high earner…

Apart from our childcare bill I don’t consider anything that we do to be particularly extravagant nor have we overstretched ourselves apart from the fact we both work full time and pay full time childcare. I’m not saying we are struggling, I am highlighting that the biggest challenge is the cost of childcare for the ‘benefit’ of working full time, and having kids I suppose. Yes either of us could go part time to reduce this expenditure (my partner is effectively working for nothing but equally he doesn't want to be a SAHD which I fully respect) but (I thought) we are meant to be being encouraged to work to pay income tax which is meant to be supporting the country

How does your point about who pays more tax relate to my point that minimum wage is the same hourly rate in both the north and the south and that salaries in the north are therefore not necessarily any lower as you suggested>

Obviously no-one on minimum wage pays as much tax as someone earning £60K because that isn't how progressive taxation works. I'm afraid I don't understand the point you are trying to make. I do think your optimism about council housing is very much misplaced though.

They may be getting a housing allowance, but don't get to keep it! I'd like to know how much UC goes to landlords and reckon that the "benefit bill" would be a lot lower if only council houses hadn't been sold off, or more had been built to replace them.

If someone's getting housing costs in their UC, the taper is applied to their earnings as soon as those earnings exceed £379 a month net. If they manage to earn an extra £100 one month, they'll lose 30% in tax and NI. Then another 55% of the £70 that's left will come off their UC. They'll only be a bit over £31.50 better off.

There's little incentive for people to increase their hours or do overtime.

I'm not aiming my upset towards them. I'm simply saying that, if you are wealthy, you should not be asking for sympathy. You should be putting your support behind those who are struggling.

At the moment, the government relies upon people earning, say, 60-120k aligning themselves with the 'wealthy'. It relies on those people wanting to think life should be better. It wants those people to believe they are 'struggling' and ought to be the priority.

What we actually need is for those people to agitate on behalf of society in general.

I remember thinking it would be the very wealthy who would benefit from Covid response

People didn’t want to hear much about anything back then though

The hard part is how you obtain that wealth when other countries will quite happily host them for their wealth instead