Earning more than £120K? Take some time off and stop working
Discussion
Just as I finally log off the work email at nearly midnight, I see the BBC suggests chasing £££££ really isn't worth it once you get to a certain limit. I'm not sure I would agree, even though £££££ isn't what drives me to put the extra hours in.
So how much is 'enough', though I suspect the usual London versus everyone else view points will come up
.
https://www.bbc.co.uk/programmes/articles/1yxp6zSJ...
So how much is 'enough', though I suspect the usual London versus everyone else view points will come up
.https://www.bbc.co.uk/programmes/articles/1yxp6zSJ...
Assuming typical Pistonhead director type
- large house in the country with triple garage
- City pad
- Au pair/cleaner etc
- kids at private school
- Ski holiday, decent holiday to Maldives in the summer plus various other trips
- Mclaren/Ferrari weekend car, RR for the Mrs and something else for day to day
I suspect this costs at least £500k per year to keep that sort of show on the road (ps that is not me...)
- large house in the country with triple garage
- City pad
- Au pair/cleaner etc
- kids at private school
- Ski holiday, decent holiday to Maldives in the summer plus various other trips
- Mclaren/Ferrari weekend car, RR for the Mrs and something else for day to day
I suspect this costs at least £500k per year to keep that sort of show on the road (ps that is not me...)
As usual, "It depends". If you're on £120k, but your other half is not working, and you have kids, and you live in the South East / London, it's not quite as much as people think.
There is also an argument to limit earnings above £100k, as there is punitive tax after this point (62% I think).
There is also an argument to limit earnings above £100k, as there is punitive tax after this point (62% I think).
Too many variables for this to make any sense. I might be happy with £120k coming in, Prince Harry probably not. As usual there’s no mention of whether that’s £120k for a couple or £120k per person. That must change the equation a lot. Having a small vs large family, similar.
The most glaring error in this analysis is that no consideration is given to savings ratio. If your salary doubles from £120k to £240k it does not follow that you will allow your lifestyle to creep. You might up your savings ratio and retire 20 years earlier than you otherwise would have. Early retirement makes some people happy and others not yet it is the biggest expense you’ll ever make.
The most glaring error in this analysis is that no consideration is given to savings ratio. If your salary doubles from £120k to £240k it does not follow that you will allow your lifestyle to creep. You might up your savings ratio and retire 20 years earlier than you otherwise would have. Early retirement makes some people happy and others not yet it is the biggest expense you’ll ever make.
The futility of comparisons with others is a good point in the article.
I've two main circles of friends. Those I grew up with who left school without going to university and those I went to uni with. There's a large difference in income between them with most of the latter earning much more although there are exceptions.
When out with the former I feel I'm doing pretty well financially. When I'm out with the latter I feel stunningly average. I know it's all in the head but it's human nature. Believing too much on PH would probably also mess with your head on that.
Although I'd never consider stopping working until I'm at least mortgage free there are several occasions where I've taken a lower salary offer for a better quality of life.
I've two main circles of friends. Those I grew up with who left school without going to university and those I went to uni with. There's a large difference in income between them with most of the latter earning much more although there are exceptions.
When out with the former I feel I'm doing pretty well financially. When I'm out with the latter I feel stunningly average. I know it's all in the head but it's human nature. Believing too much on PH would probably also mess with your head on that.
Although I'd never consider stopping working until I'm at least mortgage free there are several occasions where I've taken a lower salary offer for a better quality of life.
cheesejunkie said:
The futility of comparisons with others is a good point in the article.
I've two main circles of friends. Those I grew up with who left school without going to university and those I went to uni with. There's a large difference in income between them with most of the latter earning much more although there are exceptions.
When out with the former I feel I'm doing pretty well financially. When I'm out with the latter I feel stunningly average. I know it's all in the head but it's human nature. Believing too much on PH would probably also mess with your head on that.
Although I'd never consider stopping working until I'm at least mortgage free there are several occasions where I've taken a lower salary offer for a better quality of life.
Similar situation here, although those I know who went into a trade (mainly) all seem to have minimal to no mortgage and some good savings stocked up.I've two main circles of friends. Those I grew up with who left school without going to university and those I went to uni with. There's a large difference in income between them with most of the latter earning much more although there are exceptions.
When out with the former I feel I'm doing pretty well financially. When I'm out with the latter I feel stunningly average. I know it's all in the head but it's human nature. Believing too much on PH would probably also mess with your head on that.
Although I'd never consider stopping working until I'm at least mortgage free there are several occasions where I've taken a lower salary offer for a better quality of life.
Those who went to uni are the group which contain a handful who are teetering on the brink of financial oblivion.
Puzzles said:
At some point you value your time more than the take home pay.
At the moment I’m putting £40k into my pension. If they remove the tax relief for pensions I’ll probably stop and most likely cut my hours in half.
Not really good for the uk economy.
I suppose it depends.At the moment I’m putting £40k into my pension. If they remove the tax relief for pensions I’ll probably stop and most likely cut my hours in half.
Not really good for the uk economy.
£40k into pension that’s then invested mostly not in the UK.
Gov saves on £££ refunds which it can then spend to stimulate the economy, either through tax cuts or spending (assume on worthwhile stuff)
Reduced economic output by you opens up opportunity for others, and if you’re otherwise happy, that’s a gain for others.
Puzzles said:
At some point you value your time more than the take home pay.
At the moment I’m putting £40k into my pension. If they remove the tax relief for pensions I’ll probably stop and most likely cut my hours in half.
Not really good for the uk economy.
This is true and I'm at that point I would rather have less stress / timeout than take home 30p in every pound I earn. At the moment I’m putting £40k into my pension. If they remove the tax relief for pensions I’ll probably stop and most likely cut my hours in half.
Not really good for the uk economy.
CheesecakeRunner said:
Without going into detailed numbers, it's a problem that affects me, and has resulted in me choosing not to continue promotion progress with my current employer.
I look at what my colleagues directly above me need to do in order to earn a salary to get above the punitive tax position, and it's simply not a level of sacrifice of personal time and extra stress that I'm prepared to do.
Given my current employer is not unusual at all, this would appear to be my ceiling in the industry, which is a bit of shame with twenty years to go until I retire, but everyone exceeds the level of their competence eventually
Same here, bouncing off my self imposed ceiling of what i'm prepared to give an employer for X amount. I've exhausted all my tax mattresses so my next move is reduced hours I think. I look at what my colleagues directly above me need to do in order to earn a salary to get above the punitive tax position, and it's simply not a level of sacrifice of personal time and extra stress that I'm prepared to do.
Given my current employer is not unusual at all, this would appear to be my ceiling in the industry, which is a bit of shame with twenty years to go until I retire, but everyone exceeds the level of their competence eventually
otolith said:
Or keep working long enough to enable you to quit for good at a younger age?
This for us. Personally our household is going for the ‘as much as possible for as short a time as possible’ approach. First post response isn’t probably a million miles away in terms of lifestyle of the very wealthy but I think the number is still too low and would say you’d need more.
Big things that affect this of course largely are where you want to live and whether you want to pay for your kids schools. Everything else beyond silly things like boats and hyper cars doesn’t really touch the sides of a big house somewhere expensive and 15 years of £20-30k net per annum per child on a school.
Edited by okgo on Wednesday 25th January 12:24
Kickstart said:
Assuming typical Pistonhead director type
- large house in the country with triple garage
- City pad
- Au pair/cleaner etc
- kids at private school
- Ski holiday, decent holiday to Maldives in the summer plus various other trips
- Mclaren/Ferrari weekend car, RR for the Mrs and something else for day to day
I suspect this costs at least £500k per year to keep that sort of show on the road (ps that is not me...)
Unless there is inheritance or some massive bonus on top of that £500k pa won't get you that lifestyle. The income tax alone is £210k- large house in the country with triple garage
- City pad
- Au pair/cleaner etc
- kids at private school
- Ski holiday, decent holiday to Maldives in the summer plus various other trips
- Mclaren/Ferrari weekend car, RR for the Mrs and something else for day to day
I suspect this costs at least £500k per year to keep that sort of show on the road (ps that is not me...)
I’m in the rough territory (before bonus) and won’t expect to earn much more in my role in the north of England - maybe 20-30k more, but that’s probably it. I’ve got just over 20 years to current state pension age, though intend to finish before then.
I’ve recently finished all the big spending on the house, so now it’s time to load up my not currently great pension and stop paying 60+% tax on a chunk of my earnings.
The rest of my money can go towards fun stuff, savings, holidays and a fund for university fees for our 12 yo daughter.
I’ve got a risk to my health, so life needs to be for living (and pensions to be available to Mrs OMITN if I don’t make it that far!). That said I do - on the whole (though not currently!) enjoy my job so not planning to cut hours.
But if everything else were in place and I was 10 years older and mortgage free, I’d probably ease my foot off the gas. Live life.
I’ve recently finished all the big spending on the house, so now it’s time to load up my not currently great pension and stop paying 60+% tax on a chunk of my earnings.
The rest of my money can go towards fun stuff, savings, holidays and a fund for university fees for our 12 yo daughter.
I’ve got a risk to my health, so life needs to be for living (and pensions to be available to Mrs OMITN if I don’t make it that far!). That said I do - on the whole (though not currently!) enjoy my job so not planning to cut hours.
But if everything else were in place and I was 10 years older and mortgage free, I’d probably ease my foot off the gas. Live life.
I stumbled upon this website recently….
https://www.varbes.com/salary/london-salary
Which shows average salary and property prices across the different region in the UK. If you scroll down a bit you can change region etc.
In London the average salary for men is £63k with an average property price of £705k - or around 11 times.
Where as in the north east average salary is £35k but average property is only around £173k. - just under 5 times.
This is all anecdotal as they haven’t used median and London will get skewed massively.
Just not sure why average UK house price or average UK salary or even the point in the OP article even exist as metrics as they are totally pointless.
https://www.varbes.com/salary/london-salary
Which shows average salary and property prices across the different region in the UK. If you scroll down a bit you can change region etc.
In London the average salary for men is £63k with an average property price of £705k - or around 11 times.
Where as in the north east average salary is £35k but average property is only around £173k. - just under 5 times.
This is all anecdotal as they haven’t used median and London will get skewed massively.
Just not sure why average UK house price or average UK salary or even the point in the OP article even exist as metrics as they are totally pointless.
MarcelM6 said:
Kickstart said:
Assuming typical Pistonhead director type
- large house in the country with triple garage
- City pad
- Au pair/cleaner etc
- kids at private school
- Ski holiday, decent holiday to Maldives in the summer plus various other trips
- Mclaren/Ferrari weekend car, RR for the Mrs and something else for day to day
I suspect this costs at least £500k per year to keep that sort of show on the road (ps that is not me...)
Unless there is inheritance or some massive bonus on top of that £500k pa won't get you that lifestyle. The income tax alone is £210k- large house in the country with triple garage
- City pad
- Au pair/cleaner etc
- kids at private school
- Ski holiday, decent holiday to Maldives in the summer plus various other trips
- Mclaren/Ferrari weekend car, RR for the Mrs and something else for day to day
I suspect this costs at least £500k per year to keep that sort of show on the road (ps that is not me...)
When my fortunes changed a few years ago and my wage took an unexpected jump I decided to cut my working day by 2hrs and went down to 4 days a week. I could easily have kept knocking my pan in which would have pulled in more money but what would I do with it? Bought a bigger house, flashier cars, sent the kids to a different school or piled it in to my pension. Having a child that went through 4 years of cancer treatment in the years proceeding this taught me that enough money to not worry is enough money for me. I decided to spend as much time as possible in the present doing what I enjoy.
Edited by nunpuncher on Wednesday 25th January 12:48
I think it depends on how you earn your money.
I earn money based on output so to double my earnings I'd need to double my output therefore the £100-125k area after pension SS is a point where it becomes unattractive to put in extra effort to lose 62p in the pound.
However, if I got a different opportunity where remuneration wasn't directly output based and my employer said, you have been delivering great results, built a productive team we are giving you £50k a year rise for the same job to ensure we retain you, only a fool would say no.
I earn money based on output so to double my earnings I'd need to double my output therefore the £100-125k area after pension SS is a point where it becomes unattractive to put in extra effort to lose 62p in the pound.
However, if I got a different opportunity where remuneration wasn't directly output based and my employer said, you have been delivering great results, built a productive team we are giving you £50k a year rise for the same job to ensure we retain you, only a fool would say no.
Brett748 said:
I think it depends on how you earn your money.
I earn money based on output so to double my earnings I'd need to double my output therefore the £100-125k area after pension SS is a point where it becomes unattractive to put in extra effort to lose 62p in the pound.
However, if I got a different opportunity where remuneration wasn't directly output based and my employer said, you have been delivering great results, built a productive team we are giving you £50k a year rise for the same job to ensure we retain you, only a fool would say no.
Agreed, that's why I've never been tempted to go down the contractor route. Your income is limited by what you can charge and time billed. Add on the hassle of chasing tight fisted CFOs for money and it's a hassle I'd rather be without. There's more to be made in product R&D and sales as it's more scalable.I earn money based on output so to double my earnings I'd need to double my output therefore the £100-125k area after pension SS is a point where it becomes unattractive to put in extra effort to lose 62p in the pound.
However, if I got a different opportunity where remuneration wasn't directly output based and my employer said, you have been delivering great results, built a productive team we are giving you £50k a year rise for the same job to ensure we retain you, only a fool would say no.
I might consider contracting as I get closer to retirement if it's still an option and I can do it part time. Not necessarily a reduced week as in my experience that doesn't result in a reduced workload/target but more time off between contracts seems appealing.
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