Cost-of-living crisis pushes one-quarter of £100,000+ earners to living ‘pay cheque to pay cheque’

More than one-quarter of people earning a six-figure salary in the UK are living pay cheque to pay cheque, according to new research from RBC Brewin Dolphin.

A survey conducted by the wealth manager on people across the UK with an income of £100,000 per year or more found that 26% of respondents said they had no money left at the end of the month.

The younger the respondents were, the more likely they were to be struggling to make ends meet. Just under 30% of those aged 40 and under said they were living pay cheque to pay cheque, which fell to 26% for those over 40 and 16% for those aged 60 and above.  

Figure 1: Would you say you are currently living pay cheque to pay cheque?

High earners in Wales were the most likely to say they were living pay cheque to pay cheque, at 33%, while those in Yorkshire and The Humber were least likely, with 20%. In London, 28% of high earners said they were struggling to live within their means. The mean average annual pay in London is much higher than most other parts of the country, at £41,866 – in Wales it is £30,596 and in Yorkshire and The Humber it is £30,000¹

The vast majority, 90%, of those who said they were living pay cheque to pay cheque attributed it to cost-of-living increases, while 38% blamed rising mortgage payments. Another 29% said debt repayments were causing them problems and 11% pointed to car finance costs.

More than two-thirds, 69%, said their pay had failed to match inflation, with 11% saying their salary increase had exceeded inflation and the remaining 20% seeing their pay keep pace with rising costs.

Carla Morris, financial planner at RBC Brewin Dolphin, said: “The findings of our survey underline just how much the cost-of-living crisis has affected every section of society in the UK. Even people who are among the highest earners in the country are living pay cheque to pay cheque, with almost all of them citing the rising cost of living as one of the main reasons for being in that position. Wages are also failing to keep pace with inflation for the majority of people, even in this income bracket, which means they are struggling to offset the impact of higher costs.”

Nonetheless, half of the people surveyed reported their financial situation had improved since the beginning of the Covid-19 pandemic and 37% said it had improved in the past 12 months. However, that left a majority saying their situation was the same or worse compared to this time last year, with 39% and 25% respectively.

Nearly half, 47%, of high earners expect their financial situation to stay the same in 2024. Another fifth, 19%, believe it will get worse, with the remaining 34% expecting to be better off. Older respondents, those aged 60 and over, were much more likely to be pessimistic about their financial situation next year, with 82% saying they believe it will either stay the same or be worse.

Figure 2: How do you expect your financial situation to change in 2024?

Carla Morris said: “While high earners aged 60 and over are perhaps not feeling the pinch as much as their younger counterparts at the moment, they are considerably more pessimistic about their financial situations next year. Rising costs will gradually begin to eat away at their income and, although the state pension will be protected by the triple lock, other savings and the income they provide may be struggling in the current environment.

“However, many of the people in this age group will also likely have been through these types of high inflation and high interest periods before. They might not have the earning capacity they once had, but will have more experience than many of their younger counterparts in how to financially navigate them.

“Whatever stage in life, having a plan can make a huge difference to your current and long-term financial situation. This is particularly true during tough periods, like the one we find ourselves in now.”

Disclaimers

The value of investments can fall and you may get back less than you invested. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

RBC Brewin Dolphin is a trading name of Brewin Dolphin Limited. Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register reference number 124444) and regulated in Jersey by the Financial Services Commission. Registered Office: 12 Smithfield Street, London, EC1A 9BD. Registered in England and Wales company number: 2135876. VAT number: GB 365 3456 40.

– ENDS –

Survey conducted on 1,268 high earners for RBC Brewin Dolphin by FindOutNow between 25-27 September, 2023.

PRESS INFORMATION

For further information, please contact:

Peter McFarlane peter.mcfarlane@framecreates.co.uk / Tel: 07412 739 093

Richard Janes richard.janes@brewin.co.uk / Tel: +44 (0) 20 3201 3343

NOTES TO EDITORS

About RBC Brewin Dolphin

RBC Brewin Dolphin is one of the UK and Ireland’s leading wealth managers and traces its origins back to 1762. With £53.8* billion in assets under management, we offer award-winning, personalised wealth management services from bespoke, discretionary investment management to retirement planning and tax-efficient investing.

Our qualified investment managers and financial planners are based in 33 offices across the UK, Jersey and Republic of Ireland. They are committed to the most exacting standards of client service, with long-term thinking and absolute focus on our clients’ needs at the core.

As part of Royal Bank of Canada (RBC), we are now able to draw on the strength of a global financial institution to continue to improve the service we provide to our clients and drive further innovation across our business.

*as at 30th April 2023.

Disclaimers

The value of investments can fall and you may get back less than you invested. RBC Brewin Dolphin is a trading name of Brewin Dolphin Limited. Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register reference number 124444) and regulated in Jersey by the Financial Services Commission. Registered Office: 12 Smithfield Street, London, EC1A 9BD. Registered in England and Wales company number: 2135876. VAT number: GB 365 3456 40.

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¹ Source: https://www.statista.com/statistics/416139/full-time-annual-salary-in-the-uk-by-region/