InvestmentsPersonal Finance
Written By Helen Carey
Every few years the Office for National Statistics releases data from their Wealth and Assets Survey. The latest data covers the period from April 2018 to March 2020.
What is the definition of household net worth?
In the ONS study, a household’s net worth consisted of four main components:
Net property value (this is the value of their residences, minus any mortgage debt).
Physical assets (such as household contents, cars etc.).
Pension savings.
Net financial position (the value of their savings and investments outside of pensions, minus their financial liabilities).
Essentially, this is everything they OWN, less everything they OWE.
Interestingly, net property and pension savings are the biggest sources of household wealth, which together account for more than 75% of total wealth. Pensions are however the largest single component of household wealth at 42% and net property comes in at 36%. Financial wealth accounted for 13% and physical wealth made up 9% of household wealth.
Some of the main points that arose from the report are:
The median average household net worth in Great Britain was £302,500.
The median average household net worth in the South East was £503,400.
Households, where the head was retired, are the wealthiest group, with a median average wealth of £489,300.
To be one of the richest 1% in Great Britain, your household wealth needs to be at least £3.6m.
The 10% least wealthy households in Great Britain have a household wealth of £15,400 or less.
A look at wealth inequality in Great Britain.
Wealth inequality measures the extent to which wealth is distributed across a country’s population. In Great Britain, the distribution of wealth is highly imbalanced. The top 10% of households possess a staggering 43% of the total wealth, while the bottom 50% hold a mere 9%.
The richest 1% of households have a household wealth of at least £3.6 million.
The least wealthy 10% of households have £15,400 or less, of which half only had wealth in physical assets and nearly half had more debt than financial assets.
In the top 1% of households, pension wealth was the largest component with an average holding of £2 million.
For households where the head is between 55 and State Pension Age, the average pension savings were just over £200,000.
Across the population, net financial wealth (savings and investments outside of pensions) made up the smallest component of household wealth. However, the top 1% of households buck this trend with financial assets that are the equivalent to the financial wealth of the entire bottom 80% of households.
Among the affluent households, the richest 1% are defined as those whose cumulative wealth exceeds £3.6 million. On the other hand, the least prosperous 10% of households possess wealth amounting to £15,400 or less. Within this group, at least half of them possess wealth solely in the form of physical assets, with an average value of £8,000. Additionally, nearly half of this segment carries more financial debt than they possess in financial assets.
The table below shows the average household wealth in Great Britain by percentile.
| Percentile | £ |
| 1 | -£ 1,700 |
| 2 | £ 2,500 |
| 3 | £ 2,800 |
| 4 | £ 4,200 |
| 5 | £ 6,700 |
| 10 | £ 15,400 |
| 15 | £ 27,200 |
| 20 | £ 44,700 |
| 25 | £ 71,000 |
| 30 | £ 107,200 |
| 35 | £ 146,400 |
| 40 | £ 193,800 |
| 45 | £ 246,600 |
| 50 | £ 302,500 |
| 55 | £ 366,300 |
| 60 | £ 436,100 |
| 65 | £ 519,000 |
| 70 | £ 617,900 |
| 75 | £ 733,800 |
| 80 | £ 895,000 |
| 85 | £1,105,900 |
| 90 | £1,413,700 |
| 95 | £1,988,500 |
| 96 | £2,197,500 |
| 97 | £2,469,200 |
| 98 | £2,862,800 |
| 99 | £3,668,200 |
Household total wealth by percentiles, Great Britain, April 2018 to March 2020.
Household wealth by age in Great Britain.
Typically, wealth tends to increase with age. In England, the average age at which individuals become first-time homebuyers is 32 years. Moreover, participation in workplace pension schemes and the amount of pension contributions are positively correlated with income, which also tends to rise with age. Consequently, wealth is likely to accumulate gradually at first, and then experience accelerated growth until retirement. Once individuals reach the State Pension age, household wealth often decreases as pension wealth, one of the primary assets, is typically accessed through lump sum payments and annuities.
As such, households headed by individuals aged between 55 years and under the State Pension age (SPA) are the wealthiest in Great Britain. This group possess wealth that is 25 times greater than that of the youngest households (those aged 16 to 24 years), based on the median measurement.
In the age group of 25 to 34 years, the median wealth among households with a household reference person (HRP) was approximately £77,000 between April 2018 and March 2020, with the majority of wealth being held in physical assets, averaging £30,000. For the subsequent age group (35 to 44 years), wealth was nearly three times higher, reaching almost £200,000, with net property being the largest asset at an average of £60,000.
The average household net worth in Great Britain where the head is aged 16 to 24 is £22,300.
The average household net worth in Great Britain where the head is aged 25 to 34 is £76,800.
The average household net worth in Great Britain where the head is aged 35 to 44 is £198,100.
The average household net worth in Great Britain where the head is aged 45 to 54 is £366,600.
The average household net worth in Great Britain where the head is aged 55 to under SPA is £553,400.
The average household net worth in Great Britain where the head is at State Pension Age and over is £467,700.
Conclusion.
This article includes only a small snapshot of data from the research, however, it’s clear that household wealth increases as we age and really accelerates from our mid-thirties and onwards, peaking just before retirement. Once retired, we then start drawing down on our accrued wealth by accessing pensions, converting savings to annuities and paying off mortgages. Furthermore, the severe level of wealth inequality in the UK is evidenced by the top 10% of households owning 43% of the total wealth, while the bottom 50% holds only 9%.
What this article has hopefully done is given you an opportunity to see where you stand versus the rest of the UK. Perhaps this helps as a yardstick for comparison as you build your own savings and also helps you to build a better understanding of the challenges that others face.
What’s next?
If you want to understand more about how to calculate your own net worth, make sure you read our article ‘What is net worth and how do I calculate my net worth?’. You can also check out the research on Household Net Worth by the ONS. They also have a more detailed report on wealth distribution in Great Britain.
If you need help or advice on your personal or business finances or if you want to consider investing to make your money work harder, you canget in touch with one of our advisorsfor independent financial advice. We offera free initial consultationand although we are based in Tunbridge Wells, we advise clients across the UK.
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Don’t forget, this article offers general financial information and should not be taken as personal advice. Remember that investments and pensions can go up and down in value, so you could get back less than you put in. Tax rules can change and the benefits depend on individual circ*mstances.
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Helen Carey
