How much do you need to earn to be rich?
- The median annual salary in the UK is around £37,430
- No matter what you earn, inflation is eating away at your purchasing power
- Investing could help conserve and grow your buying potential over the long term
The value of your investments and the income you receive from them can go up and down, and you may get back less than you invest. Any examples are for illustration purposes only.
Rich is relative. Let’s get that out of the way first. Where you live, what your spending looks like, how many people depend on your salary and how much you’re able to save are a few variables that will produce wildly different perceptions and lived experiences, from person to person.
It doesn’t stop us wondering what a broad threshold might be to be considered rich in the UK today, though. So, while there’s no firm definition, there are a few statistics to help us benchmark our own financial position or satisfy our nosiness.
Just a note before we get stuck in, it’s a fool’s errand to define your own situation by external measures. We are a lot more than the money in our pocket. So, rather than spark conversations around greed, excess or worry, general observations on earnings might give us aspirational markers, help with financial planning and provide a bit of relief for earners struggling to understand if they’re ‘doing OK’ or not.
So, to the numbers.
Top 1% of UK earners
- To be in the top 1% of earners in the UK, you need to earn upwards of around £183,000 per year (Guardian, Global Payroll Association, Office for National Statistics (ONS), 2024)
- To be in the top 5% of UK earners, you need to earn around £82,200 (Guardian, 2024)
- To be in the top 10% of UK earners, you need to be on at least £72,150 (ONS, 2024)
- The median annual salary in the UK is approximately £37,430 (ONS, 2024).
Median annual earnings for full-time employees in the UK in 2024, by region
Median annual earnings for full-time employees in the UK in 2024, by percentile
Is your wealth falling victim to inflation?
As we mentioned up top, and as is hopefully evident in the geographical divide - it’s far from a ‘one size fits all’ measure, as there will be different influences at play i.e. average house prices (£531,000 in London vs. £166,000 in the North East of England, as of August 2024; gov.uk).
Read more: Inflation and investing to beat it
We also need to account for the eroding effect of inflation, which is constantly eating into the value of what we can actually buy with our money from one year to the next. If your cash is lying gathering dust, or is in an account with an interest rate below the current rate of inflation, your purchasing power is fading year by year.
Building wealth is about more than take-home pay
This is where the conversation tends to end - annoyingly, right at the point where we could get the most benefit out of it. Crucially, and no matter what we earn, the real question is what to do with your money after you’ve been paid, in an effort to battle the inflation gremlins. How we put our money to work is also an element within our control, as opposed to our salary which we don’t always have a say in.
And while more coming in means more opportunity to generate returns on your savings and investments, time is an asset no-one can buy, earn or give away. And time can really have a phenomenal effect on wealth creation for savers and investors able to put any amount aside.
Read more: Compound interest: the frenemy you need to know
This is where investing could help over the long term. Using a 7% interest rate (the average annual return of the US S&P 500 index, from 1999-2024), an investor drip-feeding money into the market over 20 years could more than double their investment.
| Monthly investments | Interest rate | Time period | Total invested amount | Returns generated | Total value |
| £100 | 7% | 20 years | £24,000 | £26,772.92 | £50,772.92 |
| £200 | 7% | 20 years | £48,000 | £53,545.83 | £101,545.83 |
| £500 | 7% | 20 years | £120,000 | £133,864.59 | £253,864.59 |
Hypothetical example based on monthly investments, compounded once per year, over 20 years. Past performance is not a reliable indicator of future results. When you invest your capital is at risk.
Compare those returns to what we might have achieved by stockpiling cash. The proxy here is 3-month US Treasury Bills, whose annual returns over the past two decades were 2.3%.
| Monthly investments | Interest rate | Time period | Total invested amount | Returns generated | Total value |
| £100 | 2.3% | 20 years | £24,000 | £6,360.64 | £30,360.64 |
| £200 | 2.3% | 20 years | £48,000 | £12,721.29 | £60,721.29 |
| £500 | 2.3% | 20 years | £120,000 | £31,803.22 | £151,803.22 |
Hypothetical example based on monthly investments, compounded once per year, over 20 years. Past performance is not a reliable indicator of future results. When you invest your capital is at risk.
The result here is that cash savers could have generated around 25% in overall returns. There are a few caveats here though, which add nuance to any direct comparison. First, investing involves risk and there is the possibility you’ll end up with less than you put in. That’s why time is so important here - history shows us that markets rise over time and the longer you give your investments time to compound, the greater the end result could be.
And, while it’s tempting to say cash doesn’t come with risk, it’s more correct to say it doesn’t carry the same investment risk but does carry inflation risk. Case in point: interest rates have risen after Covid, in an effort to tame inflation but, given inflation over the 30 years to the end of 2023 averaged 2.5% per year, cash was still falling victim to price rises. Even with the natural volatility of the stock market, the US market would have outperformed cash and inflation for those willing to step onto the risk ladder.
Focus on doing the best you can with what you have
Whether we want to know the nation’s salary situation out of pure curiosity or to use as a yardstick to understand more where you stand in relation to the average Briton, don’t let it weigh on your thoughts. It’s much more important to feel empowered to take control of your own finances, whatever they may be, and put them to work in a way that suits you.
A key part of looking at what our money could achieve over the long term is that we become less tied to what our take-home pay is and get a better idea of how we can pay ourselves later down the line.
That’s where focusing on the nation’s rich list falls short and, while stock market returns aren’t guaranteed and don’t rise in a straight line, with some active ownership over our finances, the question can become "How do I make myself richer?"
Discrete calendar year performance
| 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 | |
| S&P 500 | 27.4% | 16.9% | -0.5% | 26.0% | 10.4% |
| Global X ETF ICAV 1-3 Month T-Bill UCITS ETF (CLPP) | - | - | - | - | 4.8% |
As at 10 March 2025. Source: FE Fundinfo. Total return basis, in local currency. Past performance is not a reliable guide to future results.
Sources:
- Guardian
- Global Payroll Association
- Office for National Statistics
- Statista
- gov.uk
- 30 years of financial market returns; A Wealth of Common Sense
Important information
When you invest your capital is at risk. Past performance is not a reliable guide to future returns. Your investments and the income you receive from them may go down as well as up so you may get back less than you invest.
Make sure to do your own research on what investments are right for you before investing or consider seeking expert financial advice. Please note that this article is meant for information and does not constitute any financial advice.