Meet the Henry- High Earner not rich yet

[Ontobetterthings]

This was a very interesting read about a man who earns 100k but struggling financially working in London. After doubling his wage to 100k with inflation costs he is only 6k better off a year.

https://www.cityam.com/100k-isnt-a-big-salary-and-we-need-to-talk-about-it/

I can believe 100k salary in London is a struggle. Aibu?

Out of interest, do you consider yourself rich, and/or do you sympathise with Henry at all?

Yes totally agree. When I started work in 2012 the people who were at the level I am now had very nice lives - they lived in places like Clapham, Fulham, Putney, they had nannies and private school for their kids and had multiple foreign holidays every year. Those people are mid-late 40s now, maybe early 50s. They got on the housing ladder preGFC and are now thousands of quids in.

Now I have reached the equivalent level in my career I live in an edgy part of east London, I did have a nanny but spent basically all my disposable income on it - most of my peer colleagues use nursery, kids at state school and I haven’t been abroad since my 4yo was born. There has been a very dramatic shift downwards in living standards in the last decade.

That represents the residue of both of our parental estates, deeded by variation, plus as much again from what we have earned and saved in 50 years. We are 70-ish. DH started , and still runs, a small specialist company, in 1992. I was a freelance creative and very successful until I had DC at 43. But we did not inherit anything until quite recently, so we have had to earn everything ourselves. We bought our forever home well, I won't mention luck, but property has helped, and our location is suddenly desirable.

We are what I think of as "well-off" @Waryclam, but I don't quite understand how it happened.

I think Henry is not unreasonable to feel aggrieved that he has only £6k extra disposable income for his £50k income increase. I am sure his instincts are kind and that HENRY does not want to live surrounded by poverty.

My DC is earning NMW in the SE, with an hour's commute each way. Without family support...

@Papyrophile You're being sensible to give it to your DC and I'm sure they're very grateful. It will be a life-changing amount for them.

I just hope your DC doesn't look at Henry and think "he's the problem - we need to tax the rich like him more", while deriving moral superiority from being closer to the working man / not a sell-out / not a materialistic jerk who only cares about salary, etc, etc...

(Nothing in your post implies that your DC specifically acts like this, editing to say - but it's a very common attitude on MN in my experience.)

And this is generational wealth at play. Of course you do the best for your child.

But you are rich if you can afford to give away £300k. And if your daughter is on minimum wage, with no housing costs and £300k in assets at 26, she's well on her way to being better off than Henry in long run. He has more monthly income (adjusting for housing costs and tax), but if he lived on the same budget as your daughter and saved the rest it would take him around 13 years to save up that 300k [ok less probably because of compound interest so say 10 years], by which time your DD's house is probably worth 350-400k. Plus he's already 34 - he's been working around 8 years longer than your DD.

Adjust that for a scenario where both people are on minimum wage, or with people are Henry. It's simply impossible for the person without the generational wealth to catch up.

It's why we should be taxing wealth. Understandably you don't redistribute it out of the goodness of your heart (and I wouldn't either!) and so you'll look to give as much as possible to the people/causes you care about. In your scenario I'd be doing the same as you.

This is what government is for though - making decisions in the interest of the greater good. These types of advantage purely by luck of the draw are simply not how our society should be working.

I really appreciate your measured response @waryclam , so thank you. Yes, we have been in the right place at the right time, but we have worked damned hard for every brick we have set into our family wall. DH and I started with nothing. We both went overseas to earn a stake (and to have fun) and we were/are open to calculated risk-taking. Neither of us has has a "job" or employment since 1990. But it isn't a route for everyone, not even most poeple.

As I've mentioned it up thread, I'm likely in line for a significant inheritance (hopefully not for years to come and if it all goes on either of my parents' having a better quality end of life I want every penny spent on that). I am not certainly not giving that to Ethel (or Henry for that matter)!

I just don't think I should be given that choice - lots of it should be taken from me. Because very few people in this world actually be good enough to distribute it fairly, but there is nothing I have done in my life that means I deserve it. It's just luck because my parents have money (and for my mum at least, a large part is then luck because her parents had money!).

I know a gardener who went to private school but has severe asd so can only work freelance doing what he loves. He doesn't earn enough to pay income tax but his parents downsized and gave him 280k to buy a very run down 1 bed house in 2017 in a poor part of London in cash. He did it up himself.

He qualifies for (low income) grants to get a spanking new boiler and his small house is immaculate. I think his net worth is higher than mine and dh's.

Same. DH and I lived in a grotty flat with no window pane in the bathroom so freezing (showered at work in the winter) and bought a 3 bed house zone 3 London for 310k in 2014, did it up, sold it for 500k in 2020. When we bought our joint household income was around 70k, bit for 2 of those 6 years between 2014 and 2020 it was half that due to me being on mat leave.

We now live in a lovely 800k house in a home counties village. Our combined salary is similar to 'Henry' salary on his own, so it is doable. But 2 people earning that amount between them do much better as each have tax allowances and not paying higher rate.

The word @warycrow is getting wrong is generational. We didn't inherit because we didnt benefit from the inheritance; we passed it through a generation. We grew up in a growing economy, and did okay, but the equivalent opportunities are fewer now, so this is an attempt to level the field. I can't do so across a whole generation, but I can arrange a 1 time, one off fix, and will grant it to my flesh and blood, rather than some random.

I absolutely get the point the article makes that higher earners are not seeng the benefits. These are people who are working 12+ hour days to work their way up the corporate ladder, but not seeing a noticeable change in their lifestyle. There will of course be the 'boo hoo, cry me a river, diamond shoe too tight love' comments, but this is a very real issue, not for them, but for the country as a whole. Most of us rely on the smallish number of net contributors to cover our healthcare etc, so we need then to stay. But why would they, when their skills earn a much better lifestyle abroad. Taxing 25% of 100k gets us a lot more than taxing 40% of nothing if they leave.

Very few of us are net contributors. DH and I earn about 90k between us, pretty decent it would seem, surely we are net contributors at that amount?

Of that, we pay around 20k in tax and NI.
We have 2 children in school, each costing country about 6k, plus they get the infants Universal free school meals - £800 per year
Universal child benefit for 2 children - about 2k per year
I get PIP - 4k per year
So without even factoring in our nhs costs, of which we all have some - DD and DH are coeliac, I have arthritis, other DD has some health issues, we are net takers.

Very few people are in reality net contributors, and without them we will lose access to even basic free heakthcare, schooling etc. As someone said upthread, we are a poor country perceived as rich, we are hanging on by a thread.

Anyone who is struggling on a salary of £100k is deluded.

Anyone who thinks that a salary of £100k means a person is rich is also deluded.

It's a very conformable salary but it doesn't make anyone wealthy or rich in the current environment. Comfortable yes, rich no.

Is Ethel sending her children to school? That is also being paid for by Henry.

Does Henry get his work office cleaned? His rubbish collected? His post delivered? Does he use shops? Visit restaurants?

All the Ethels work to help provide these services? Is that not worth something?

Maybe everyone should stop paying tax full stop? We all have private healthcare and can all take our rubbish to the big tip mound ourselves, walk everywhere because of no public transport, look after our elderly parents ourselves, home educate etc etc.

I don't think that the point is necessarily that they are struggling, and I think the details in the article are a bit skewed to make a point.
But the message of the article is very valid, people of that sort of money should be enjoying a nice lifestyle, but they aren't, as they are paying to support others.

Growing up my mum also used to say we were paying for another whole family. For a bit I thought that meant my Dad actually had another family somewhere, but what she meant was the amount he was paying in tax covered benefits for a whole other family. They paid for private school for my brother as he was so badly bullied and SEN needs not met in state, and I got a scholarship to a private school so as a family we were taking very little out, and I think that was her way of expressing their frustration at 'the system', after they both came from poverty and worked their way out of it, only to find a big chunk of their money taken by Blair, Brown etc.

But some people have done a lot to earn what they have. My parents both grew up in poverty, both left school at 16, my mum to work as her single couldn't afford for her not to, and my Dad was thrown out by his alcoholic father with only the clothes he was wearing so had to work 4 jobs to pay for a room in a shared house, from 10 he was doing a paper round, helping a milkman etc to get money to buy food for him and his brother as they weren't being fed. No one gave them any advantages. He then tried to be responsible and pay into a private pension but Brown raided that and made it nearly worthless so he had to work until 73 to be able to afford to retire. Their main asset is their house, my Dad has dementia and that will likely be sold to pay for care home fees, which could leave my mum with nowhere to live.
People who work hard all their life, take very little, pay in a lot, then end up with nothing to show for it, which is very wrong.
My brother and I were not given any help, beyond the great value of a stable home and encouraging parents. My brother works minimum wage due to his SEN, but still managed to save and buy a house. I graduated and started work on 17k and bought my own flat and worked my way up the housing ladder. Again, should that be taken from us?
We are loosing the incentive to work hard, progress, which is a very dangerous place for our country to be. We are stagnating due to attitudes and policies which penalise hard work and progress.

my Dad has dementia and that will likely be sold to pay for care home fees, which could leave my mum with nowhere to live.

That's doesn't happen though, partners aren't made homeless if one goes into a care home.

People who work hard all their life, take very little, pay in a lot, then end up with nothing to show for it, which is very wrong.

What do you mean nothing to show for it though? Your parents had children who were educated, have received healthcare & potentially social care.

I think we need to reframe what we think is nothing...

We are loosing the incentive to work hard, progress, which is a very dangerous place for our country to be. We are stagnating due to attitudes and policies which penalise hard work and progress.

We never recovered from the 08 crash and high housing costs & wage stagnation are stifling productivity particularly amongst young people.

Why are you assuming Ethel is working in the service sector? Ethel could be an admin assistant in a small office, she could be in marketing, she could be in basic HR. She isn't necessarily working to do something that actually helps Henry. She might be of course.

No one is saying that Ethel should be paid less or that she's somehow less value to society than Henry. But the issue is Ethel thinks that Henry is being unreasonable not wanting to live in a house share at 34 when he is a high earner. The reason that Ethel is able to have the lifestyle she currently has is because Henry is a net contributor to the public purse. Ethel's lifestyle is being subsidized by Henry's taxes. If Ethel stops doing her job, then someone else does it. If enough Ethel's stop doing their jobs, then salaries will increase or cost of living will increase. Henry can absorb that, or if he can't he can decide to move to a cheaper area and take one of those jobs himself. But Ethel can only stop doing her job if she is able to live without a salary coming in, which is only possible because of the benefits system (paid for by Henry). Or if she is sitting on substantial assets that she can sell to fund life without a salary, which would mean she has substantial untaxed wealth.

This is how it should be - we intentionally have a progressive taxation system which means some people are net contributors and some people are net beneficiaries. Ethel isn't necessarily earning less than Henry because she works less hard, and yes some Ethel's are providing core services.

But Ethel needs to accept just how much she needs Henry to keep doing what he's doing. And people saying Henry should move out of London are missing the point that the UK can't afford for him to do that. And we should recognize that if you are in the top 4% of income in the UK, and advise is that you should be living in a house share and shopping at Aldi, something is going very very wrong because thinking you can afford your own flat in London is just unreasonable.

Life gets much, much worse for Ethel if Henry decides that he's going to go and work somewhere else for less money but a better standard of living. But if you were Henry's friend, you'd be telling him to cut his losses and move because it's probably the only way he's going to build up substantial wealth.

It should be taken from you because there is no reason you should tax someone who has money because they earn a high salary, but not tax someone who has money because they managed to buy a house and that price has gone up lots. If anything the equity in the house as a result of price increases should be taxed more because people have done absolutely nothing to earn that.

It's great that you and your brother have managed to do so well coming from very little and of course that should be praised. You mention graduating though so you have had material support from the government because they subsidized your university degree (on top of health care and presumably state education).

I'm not advocating for Henry to pay less tax but absolutely there should be a charge put against your parents home for the cost of your father's care (and no it doesn't mean your mother will be homeless). Why should Henry have to pay even more tax so that your parents can pass on generational wealth to you and your brother?

Thing is, tax has to come from somewhere. Our population pyramid is such that we can't assume we're going to be able to keep getting what we do from taxing labour. I can't say I'm too keen on paying more tax so some people can eventually keep a larger share of their parents primarily unearned equity. Which it almost invariably will be, regardless of whether those parents also happened to work hard or not.

Why should Henry have to pay even more tax so that your parents can pass on generational wealth to you and your brother?

this is the crux of it isn't it

But they have already paid tax on the income used to buy that house, that 'debt' (and i use that term veey loosely) to the country has already been paid. They paid tax on the income used to extend the house which increases its value, they have worked to maintain it in a good condition.

And how about when that 'charge' on the house exceeds what's it worth? And then if my mum later needs care? There will be no inheritance, which I'm absolutely fine with, but they feel sad that after paying in for so many years and working hard, the country expects them to pay again and again. They wanted to leave the house to their grandchildren, and it is demoralising for them that after all their hard work, coming from nothing, they will have nothing to show for it. The same people pay again and again.

Nope, no state secondary education, my parents paid for private as state school didn't meet my brothers needs, and our local comp was so awful that I got a scholarship to private too. My degree - I was tied in to work for nhs for a lowish salary for 3 years post graduating to effectively pay back my uni fees. Parents paid for private healthcare due to long waits.

🤣🤣🤣

you seem to have 0 idea of the reality in London.

”he can easily move to another rental”
hum no. For every flat to rent there is competition. The demand is far bigger than the offer, often you need a super commute to afford your flat.
£2,000 wouldnt give you zone 2 for a 1 bed

“he can access bank of mum and dad”
sounds very presomptuous. Some people do earn 6 figures but have no access to funds from parents.

when you re a young professional living i. london is costly unless you live with pain for future gain. Each to their own, but there are some factors that you cant control such as rentals.