How rich are you?

Some of the following has been taken from an article by Simon Lambert in This is Money magazine on 12th Jan 2017, although I have edited it quite considerably.

How rich are you? The highly subjective answer to this question will be influenced by your attitude to wealth, income vs spending habits, and where in the country you live. 

For the purposes of this exercise we are ignoring income in the definition of how rich one might be and are concentrating solely on the value of one’s assets.

To find out where one features on the wealth scale, we need to refer to a set of figures produced by the Office for National Statistics (ONS), although these are only produced infrequently. 

The ONS’s Wealth and Assets survey breaks down what the country owns by percentiles, to give households' net wealth. It includes in there:

  • Net Property Wealth – any property owned minus the mortgage 
  • Net Financial Wealth – everything you have in the bank, savings and investments, minus any debts 
  • Pension Wealth – the value of a defined contribution pension pot or the future value of a defined benefit income 

Pension wealth is not to be underestimated, particularly where defined benefit/final salary pensions are concerned. As an example, an expected final salary pension of say £35,000 per annum could reasonably be capitalised to a value well in excess of £1 million. i.e. this is what it would cost to buy an index linked pension with spouse’s benefits of £35,000 on the open market. The rule of thumb I use, is to multiply the anticipated income by 30; recent examples have shown this to be conservative.

The most recent figures that run to 2014 show that the bottom half of UK households have just 9 per cent of the wealth, whereas the top 10 per cent own 45 per cent of it. 

The median (the middle point of the total distribution) household wealth was £225,100, while the bottom 10 per cent of households had total wealth of £12,600 or less and the top 10 per cent had £1,048,500 or more.  

To make it into the 1 per cent, you need £2,872,600 of household wealth – but remember, this comprises everything, including pension wealth.

The bottom 1 per cent has negative wealth - at minus £4,434 (although to me this percentage in negative wealth seems low and I would expect debts to push more people into that category).

Surprisingly, the ONS figures show that overall it is actually pension wealth that accounts for the largest chunk of the overall figure, at 40 per cent, followed by property wealth, at 35 per cent. 

However, while their median pension wealth value of £749,000 contributed 43 per cent of total wealth to the top decile of households, where 98 per cent had some, it contributed just 29 per cent to the total of the least wealthy half of households. 

Property wealth was more important for this lower half, where it contributed 34 per cent of the total, even though just four in ten owned homes. Property with a median value of £420,000 contributed 31 per cent to the total wealth of the top 10 per cent.

Whilst Simon’s figures are interesting, there are of course other, much more important measurements of one’s wealth! I am, of course, referring to the non-tangibles that enrich our lives, our families, our friends, our shared experiences and our memories; it’s impossible to put a value on these and yet I hope we would all agree, they transcend physical wealth every time!

I hope you find the above interesting but, as always, if you have any concerns or questions about any finance related matter, please do not hesitate to call me at any time.

With best wishes,

Yours sincerely


Graham Ponting CFP Chartered MCSI

Managing Partner