5 ms·

Interestingly similar discussion going around in the UK at the moment after a UK MP came out saying that '£70,000' salary makes you 'rich'. 70k as a single inc

by rogy 9y ago

Interestingly similar discussion going around in the UK at the moment after a UK MP came out saying that '£70,000' salary makes you 'rich'. 70k as a single income won't get you a flat in London in any reasonable time and you'll most certainly be renting forever on that kind if money in London. Even if its triple the average UK wage. Location means everything.

praneshp 9y ago
Actually at a previous job (at the front page of HN today for CEO severance) I started developing sympathy for politicians who say things like that. I saw how out of touch upper management was with what was actually going on, and in something like government it's at a much higher order of magnitude. Doesn't excuse them, but I can understand how they say such things.
- michaelt 9y ago
  Saying that a £70,000 salary makes you rich sounds like sensible politics to me. In the UK the median pre-tax income is £22,400 with £72,000 putting you in the 95th percentile [1]; £70,000 is in the middle of the pay scale for a salaried GP/family doctor [2]; and MPs receive a base salary of £74,000 [3] (plus a bunch of extra income through a variety of opaque means) I think you would look pretty out of touch, from the perspective of someone earning £22,400 if you claimed earning £70,000 didn't make you rich. [1] https://www.gov.uk/government/statistics/percentile-points-from-1-to-99-for-total-income-before-and-after-tax https://www.gov.uk/government/statistics/percentile-points-f... [2] https://www.bma.org.uk/advice/employment/pay/general-practitioners-pay https://www.bma.org.uk/advice/employment/pay/general-practit... [3] https://en.wikipedia.org/wiki/Salaries_of_Members_of_the_United_Kingdom_Parliament https://en.wikipedia.org/wiki/Salaries_of_Members_of_the_Uni...
  - vilmosi 9y ago
    While I agree with your point, that 22400 number talks about household income not median income of an individual.
    - user5994461 9y ago
      That's misleading on purpose. "Houseold" accounts for children, single income families, and ignore benefits and unemployment. Last but not least, it's scaled for the UK, not London. If you are a male in your 20-40, living in London, being the source of income for your household. 70k couldn't be further from rich.
calvinv 9y ago
Agreed that won't make you rich in London but you can very easily buy a house outside of London or a 1-bed in London. I have friends who are on less than that and are buying in decent zone 2/3 areas. Mortgages are actually pretty cheap if you can save up the 10% deposit and live with a 10/15 min walk to a station.
- mtkd 9y ago
  but you're one child or a 1% increase in interest rates away from being in trouble
  - ig1 9y ago
    You won't get a mortgage if you're that close to struggling. Lenders will generally stress-test affordability at between 5%-6.5%
ig1 9y ago
Only if you want to live in central London. You can still easily get a house on that income in London suburbs. For example you can get a 3-bed in Orpington (20 minutes by train to London Bridge) for around £400k which should be comfortably affordable to someone on 70k.
- chrisseaton 9y ago
  > around £400k which should be comfortably affordable to someone on 70k The mortgage on that will be using up around half of your income. That's insane.
  - ig1 9y ago
    Assuming a 60k deposit (so 340k mortage), you could get a 2 year fixed mortgage at 1.53% so your repayments will be £1,178.31. £70k post-tax is around £48k so £4k/month so the mortgage will take around 30% of your take-home pay which is a fairly standard ratio.
    - mtkd 9y ago
      long term average mortgage interest rates are over 5% - if you're working in a STEM field what thought process leads you to blowing 1+ years net salary on a deposit for a 2yr fix at 1.53% with a 20+ year commitment?
      - ig1 9y ago
        Mortgage rates are fundamentally unpredictable, you can't assume that they'll revert to a 30 year average. However what mortgage lenders do is "stress test" at 5%-6.5% that means they evaluate if you'd be able to afford to pay the mortgage + cover your essential costs (food, energy, etc.) if rates rose to those levels. It's essentially a worse-case assumption to ensure you wouldn't be bankrupt if that happened, not whether you'd be comfortably off at that level. If interest rates were to rise in 5-10 years time don't forget you could also remortgage to a longer time period to significantly reduce monthly payments if you needed to. Rates aren't going to jump overnight; if they rise it'll likely be a long slow-rise by which point you should have already paid down a meaningful percentage of your mortgage.
user5994461 9y ago
FYI: £70k = £4000 per month after taxes.

by rogy 9y ago

praneshp 9y ago

Actually at a previous job (at the front page of HN today for CEO severance) I started developing sympathy for politicians who say things like that. I saw how out of touch upper management was with what was actually going on, and in something like government it's at a much higher order of magnitude. Doesn't excuse them, but I can understand how they say such things.

michaelt 9y ago
Saying that a £70,000 salary makes you rich sounds like sensible politics to me. In the UK the median pre-tax income is £22,400 with £72,000 putting you in the 95th percentile [1]; £70,000 is in the middle of the pay scale for a salaried GP/family doctor [2]; and MPs receive a base salary of £74,000 [3] (plus a bunch of extra income through a variety of opaque means) I think you would look pretty out of touch, from the perspective of someone earning £22,400 if you claimed earning £70,000 didn't make you rich. [1] https://www.gov.uk/government/statistics/percentile-points-from-1-to-99-for-total-income-before-and-after-tax https://www.gov.uk/government/statistics/percentile-points-f... [2] https://www.bma.org.uk/advice/employment/pay/general-practitioners-pay https://www.bma.org.uk/advice/employment/pay/general-practit... [3] https://en.wikipedia.org/wiki/Salaries_of_Members_of_the_United_Kingdom_Parliament https://en.wikipedia.org/wiki/Salaries_of_Members_of_the_Uni...
- vilmosi 9y ago
  While I agree with your point, that 22400 number talks about household income not median income of an individual.
  - user5994461 9y ago
    That's misleading on purpose. "Houseold" accounts for children, single income families, and ignore benefits and unemployment. Last but not least, it's scaled for the UK, not London. If you are a male in your 20-40, living in London, being the source of income for your household. 70k couldn't be further from rich.

calvinv 9y ago

Agreed that won't make you rich in London but you can very easily buy a house outside of London or a 1-bed in London. I have friends who are on less than that and are buying in decent zone 2/3 areas. Mortgages are actually pretty cheap if you can save up the 10% deposit and live with a 10/15 min walk to a station.

mtkd 9y ago
but you're one child or a 1% increase in interest rates away from being in trouble
- ig1 9y ago
  You won't get a mortgage if you're that close to struggling. Lenders will generally stress-test affordability at between 5%-6.5%

ig1 9y ago

Only if you want to live in central London. You can still easily get a house on that income in London suburbs. For example you can get a 3-bed in Orpington (20 minutes by train to London Bridge) for around £400k which should be comfortably affordable to someone on 70k.

chrisseaton 9y ago
> around £400k which should be comfortably affordable to someone on 70k The mortgage on that will be using up around half of your income. That's insane.
- ig1 9y ago
  Assuming a 60k deposit (so 340k mortage), you could get a 2 year fixed mortgage at 1.53% so your repayments will be £1,178.31. £70k post-tax is around £48k so £4k/month so the mortgage will take around 30% of your take-home pay which is a fairly standard ratio.
  - mtkd 9y ago
    long term average mortgage interest rates are over 5% - if you're working in a STEM field what thought process leads you to blowing 1+ years net salary on a deposit for a 2yr fix at 1.53% with a 20+ year commitment?
    - ig1 9y ago
      Mortgage rates are fundamentally unpredictable, you can't assume that they'll revert to a 30 year average. However what mortgage lenders do is "stress test" at 5%-6.5% that means they evaluate if you'd be able to afford to pay the mortgage + cover your essential costs (food, energy, etc.) if rates rose to those levels. It's essentially a worse-case assumption to ensure you wouldn't be bankrupt if that happened, not whether you'd be comfortably off at that level. If interest rates were to rise in 5-10 years time don't forget you could also remortgage to a longer time period to significantly reduce monthly payments if you needed to. Rates aren't going to jump overnight; if they rise it'll likely be a long slow-rise by which point you should have already paid down a meaningful percentage of your mortgage.

user5994461 9y ago

FYI: £70k = £4000 per month after taxes.