Onwards and Upwards… Increase in average UK wealth
In the latest Census 2021, issued by the Office for National Statistics (ONS), data and analysis showed household wealth has increased from July 2006 to March 2020 by 20%1.
People in the mid-level economic bracket own property, and the most prosperous group hold their wealth in pensions. The wealthiest 1% hold pension assets of approximately £2 million. They have a higher proportion of net financial wealth (savings and investments) compared to the 80% of population in the lowest economic sector2.
What does ‘net wealth’ consist of?
This consists of an individual’s assets which can include the following:
- Private pension
- Savings and/or investments after financial liabilities are taken off (net financial)
- Property value after mortgage debt is taken off (net property)
- Household contents, such as antiques, artworks, jewellery, and vehicles (physical).
Who holds the money?
A retired person is worth on average £763,800, compared to a working person worth £544,1003.
The wealthiest percentage of the population are retired. This reflects the fact that a person’s wealth usually increases over time – peaking at retirement. Data shows people aged 60 to 64 are nine times wealthier that those in their 30’s4.
Why is the ‘grey pound’ so strong?
Affluent retirees and their money are sometimes known as ‘the grey pound.’
Retirees enjoy more financial security due to lower expenditure (usually), and assets which have increased in value. They are more likely to weather economic storms and navigate their way through economic uncertainty.
Are pensions and property investments ‘neck and neck?’
The richest 10% of the UK population hold nearly half of UK net wealth. Private pensions and property make up over three quarters of total wealth5.
Interestingly, the popularity of private pensions has increased in the last 14 years, accounting for 42% of total wealth. Wealth held in property over the same time period dropped to 36%, proving that pensions are the popular choice for many when it comes to investing in their future6.
Savings and investments (net financial) come in third at 13% and finally, possessions at 9%7.
What do our experts say?
Danny James, Director of Client Services at Lloyd & Whyte said:
“It is fascinating to see the gulf between the increase in asset values and the increase in average earnings over the past decade. It is instructive for advisers and their clients on how to plan their finances and assess their wealth, especially given the number of clients whose wealth has now increased to a level that means they will potentially pay inheritance tax on estates worth over £325,000 or £500,000.
No matter how your total wealth is made up, it’s important to have a clear plan on how you want to use it for your own future and for the benefit of other family members”.
Find out more
For further information on how Lloyd & Whyte can help you manage your assets, minimise your personal and business tax, and assist you in the effective planning of your financial future, please contact us.
Email: info@lloydwhyte.com
What matters to you, matters to us
1-3https://www.ons.gov.uk/peoplepopulationandcommunity/
4-5.https://www.ons.gov.uk/peoplepopulationandcommunity/
6-7.https://www.ons.gov.uk/peoplepopulationandcommunity/
Lloyd & Whyte (Financial Services) Ltd are authorised and regulated by the Financial Conduct Authority. Registered in England No. 02092560. Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. It is important to take professional advice before making any decision relating to your personal finances. Information within this newsletter is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested.
