Meet the Brits feeling the squeeze on £100,000 salaries

To save money on groceries, Seb Kouyoujmian browses the yellow-labeled discounted items at his local supermarket. He doesn’t buy shoes unless he absolutely needs them. Takeaways are considered a luxury. This may be surprising when you find out that Kouyoujmian is an architect with a salary of over £100,000. But from the cramped one-bedroom flat he owns in north London, he says his quality of life is not what you would expect given his pay cheque. “I earn more than ever before,” says the 38-year-old. “But I feel poorer than ever.”

It may sound ridiculous to the 96 percent of the population who typically earn significantly less than £100,000 a year. According to the Office for National Statistics, the average wage in Britain is around £36,000. For people aged 18 to 21 this is closer to £24,000. And it varies by region and is getting worse outside London.

But the fact that the four percent are feeling the pressure is a symptom of what Dr. Mike Savage, professor of sociology at the London School of Economics and Political Science, calls “intensified” class divides. In other words, while the wealthy among us struggle to keep up with inflation and the cost of living, their difficulties shed light on just how bad things are getting for the rest of us. Dr. Savage helped carry out the largest survey of social class in Britain in modern history, and says the situation is urgent.

“The people who are really struggling with the cost of living and inflationary pressures are those who are poorly paid, live in precarious situations and have to juggle debt,” he says. “The fear that middle and even high-income earners will be hollowed out by inflation and the freezing of tax thresholds is a sign of the sense of insecurity felt by large numbers of people.”

The high earners are well aware of how their complaints can be interpreted. “It sounds so damn privileged,” says Kouyoujmian. “I’m not looking for sympathy, but I’m also trying to make it clear that I’m uncomfortable too.”

Lea Turner, who grew up on a council estate and left school at 16 without an education, agrees. The 39-year-old doesn’t fit the typical trajectory of a six-figure earner, having overcome the challenges of being a single parent on benefits, and then building a multi-million pound business – a digital network of business owners called The HoLT – during the pandemic.

“I’m lucky that I feel comfortable because that’s a lot more than the vast majority of people in Britain can say,” she says. “But it is not so affordable that I can rest on my laurels. I still have to maintain this level, otherwise the things I have in my life now are no longer affordable.”

Seb Kouyoujmian

Things like her house. After years of saving and planning her finances, Turner bought a house in Manchester. This year she found her mortgage increased by £300 a month. “If it goes up much more, I may have to sell eventually,” she says.

The cumulative effects of inflation have played a major role, with the Office for National Statistics reporting that a salary of £100,000 in 2000 is worth the equivalent in value and purchasing power of £53,600 in September 2024. The Institute for Fiscal Studies also reports that inflation rates for groceries, for example, have risen by an average of 26.6 percent in just over two years, and that the effect on households varied depending on income. Higher-income households, depending on their income, experienced inflation that was 7.7 percent lower than that in the bottom percentile of households – and what’s known as ‘cheap inflation’ means the cheapest products saw the highest increases. In fact, the rising price of everything means that everyone is getting less bang for their buck.

Although Turner has experienced the uncertainty of living on the breadline as a single-income earner, she says earning £100,000 “certainly doesn’t make you rich”. For example, she expected that she would easily be able to afford a new kitchen, but she says that is not the case. “I have to buy and sell clothes on Vinted. Once a year I go on an affordable vacation to the same places I’ve traveled before. It’s not a crazy luxury. I’m not flying first class. We don’t party on yachts or stay in five-star hotels or anything like that. I don’t buy designer clothes for me or my son. There are certain things in my life that have improved, but not much.

Kouyoujmian and Turner are known as HENRYs – or “High Earner Not Rich Yet” – a term coined by Shawn Tully in a 2003 article for Fortune magazine, and was used to describe people who earn high wages but don’t have much left after taxes, education, housing, family and saving for retirement. Both Kouyoujmian and Turner understand that they are better off than, say, a service worker with a much lower salary. But while an increase in one bill can be a nuisance for the relatively wealthy, all the bills rising at once could put them in a similar situation to people who earn much less.

Kouyoujmian has seen his mortgage and utility bills double and the price of his groceries triple. He says the cumulative costs of all these increases are putting a strain on resources. As a homeowner and leaseholder, he says he was recently hit with a bill for £21,000, while cancer fears prompted him to take up private medical care, which has also risen. Turner, meanwhile, says her expenses can easily reach £4,000 to £5,000 a month. She pays £1,000 a month in private school fees for her son. This, combined with any emergencies or a holiday, means that there is little left over.

An additional concern for Kouyoujmian is his retirement. He currently pays £1,100 into his pension every month, but because he only started earning six figures three years ago, he has calculated that he will have to pay £3,000 a month to retire with an income at the age of 68 of £60,000. “As an architect, I can’t afford my own services,” he says. “It’s a dream for me to be able to afford someone like me.”

He adds that his quality of life and overall work-life balance are worse than when he earned half his current salary. In his spare time he even makes furniture. “I have to work 50 to 70 hours a week, and I still feel like I’m treading water,” he says. “I know that sounds ridiculous, but I’m paranoid about retirement, especially when I look at friends, older relatives or neighbors and see how they will or won’t manage.”

Investment expert Victoria Harris says the structure of the tax system means those earning just above six figures feel the brunt of the brunt. She calls it the ’60 per cent tax trap’, a name given to the abolition of personal tax allowances for those earning just over £100,000 and under £125,000. A quirk in the tax rules means they could end up paying up to 62 percent in taxes.

In addition to the tax burden, a higher wage can result in “lifestyle creep,” meaning that as you earn more, you spend more and opt for more expensive versions of the same things you would have previously bought at a lower cost.

Harris, who runs The Curve, a company that advises women on their finances, said: “One of our members recently told me: ‘Vic, I fought so hard to break through the £100,000 ceiling but found myself spent even more outside my budget. means than when I had a lower income.’” She believes the challenges can be addressed with better financial planning. Harris advises “building trust in salary negotiations,” “creating investment strategies,” and “developing a support network” of other high earners.

Dr. However, Savage believes that both tax increases and rising inflation are systemic problems and reflect pressures on the economy. “In the context of pressure on the welfare state, individuals must increasingly rely on their private wealth to pay for routine medical and other services,” he explains. “Class divides are intensifying as the gap grows between the wealthy and the many juggling debt.”

If many of their experiences sound familiar, that’s the point. The four percent are not living as luxuriously as we expect, and that should be a cause for concern. Because if someone with a high salary can’t afford to remodel their kitchen, or eat out whenever they want, how can anyone?