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Your Lifetime Balance Sheet

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NeilHalford

The document provides an overview of average lifetime earnings, expenditures, taxes paid, and estate value for UK households based on Office of National Statistics data. It estimates that the average household earns £1,386,500 over a 47-year working life but spends £1,408,825 over a 59-year lifetime, leaving a shortfall of £22,325. It also estimates that the average lifetime taxes paid are £671,533 and the average estate left is £90,000, distributed among 5 recipients.

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Your Lifetime Balance Sheet. How much you earn, spend, and leave behind in the UK. © Neil Halford 1 st September 2009
Overview I was watching the 10pm news the other day and the BBC announced that UK Social Benefits now exceed income tax receipts. Now I did Economics at school and it seems obvious to me that this situation is untenable and there will have to be some quite drastic change if the UK is not to become insolvent. Then I looked at the Office of National Statistics (ONS) official figures and wondered what an average household might earn, spend and leave behind after death. The following slides show the key figures.....
Basic assumptions ONS 2008 figures show that life expectancy for males is 77.2 years. Retirement age for males is 65 Average working life for males is 47 years (18 to 65) Average non-dependant life for males is 59 years (18 to 77) The current state pension for a couple in the UK is £7,007.00 p.a. All figures used are ONS published figures, mainly for 2008, and are intended as an overview/ snapshot, there is a huge amount of detail available.
Lifetime Earnings The ONS figures for 2008 have average household earnings at £29,500 p.a. Assuming a working life of 47 years, lifetime income therefore is £1,386,500.00 – not including pensions. Assuming a pensionable life expectancy of 12 years, the UK Government will pay you a total of £84,084 state pension.
Expenditure COICOP category £ per week % of total UK 2007 Transport 61.70 13.4% Recreation and culture 57.40 12.5% Housing, fuel and power 51.80 11.3% Food and non-alcoholic drinks 48.10 10.5% Restaurants and hotels 37.20 8.1% Miscellaneous goods and services 35.30 7.7% Household goods and services 30.70 6.7% Clothing and footwear 22.00 4.8% Communication 11.90 2.6% Alcoholic drinks, tobacco and narcotics 11.20 2.4% Education 6.80 1.5% Health 5.70 1.2% Total COICOP expenditure 379.80 82.7% Other expenditure items 79.30 17.3% Total weekly expenditure £459.20 Total annual £23,878.40
Balance sheet Total Lifetime Income = £1,386,500.00 £29,500 x 47 Total Lifetime Expenditure = £1,408,825.60 £23,878.40 x 59 Balance -£22,325.60 You should note that these are gross figures without tax being applied. So let’s look at what happens when you apply tax & benefits...
Tax Using the current UK rates of income tax, the average lifetime income tax paid out of £1,386,500.00 will be £384,060.50 leaving a net balance after tax of £1,002,439.50. Applying the current rates of discretionary taxes and duties to the expenditure items, the average lifetime discretionary tax and duty payable on expenditure is £287,472.78. Gross lifetime tax & duty is therefore £671,533.28 meaning that on average we work for 22.76 years or 48.42% of our working lives to pay the Government.
Pensions The annual UK State Pension is £7,007 and retired life expectancy in 2008 was 12 years giving a total state pension received of £84,084.
To Summarise Lifetime household income after individual Income Tax & National Insurance is £1,002,439.50 Lifetime State Pension is £84,084.00 Lifetime Household Expenditure is £1,408,825.60
Average Estate on Death The average Estate in the UK is £90,000 net of taxes and is left to an average of 5 recipients.
Benefits System Snapshot Original Income Top 20% Before Tax & Benefits £72,600.00 Original Income Bottom 20% Before Tax & Benefits £4,700.00 Top 20% After Tax & Benefits £52,400.00 (-£20,200.00) Bottom 20% After Tax & Benefits £14,300.00 (+£9,600.00)
Thanks for looking. I’m sure this has left you asking some questions but I’m not the one to give you the answers!

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Your Lifetime Balance Sheet

  • 1. Your Lifetime Balance Sheet. How much you earn, spend, and leave behind in the UK. © Neil Halford 1 st September 2009
  • 2. Overview I was watching the 10pm news the other day and the BBC announced that UK Social Benefits now exceed income tax receipts. Now I did Economics at school and it seems obvious to me that this situation is untenable and there will have to be some quite drastic change if the UK is not to become insolvent. Then I looked at the Office of National Statistics (ONS) official figures and wondered what an average household might earn, spend and leave behind after death. The following slides show the key figures.....
  • 3. Basic assumptions ONS 2008 figures show that life expectancy for males is 77.2 years. Retirement age for males is 65 Average working life for males is 47 years (18 to 65) Average non-dependant life for males is 59 years (18 to 77) The current state pension for a couple in the UK is £7,007.00 p.a. All figures used are ONS published figures, mainly for 2008, and are intended as an overview/ snapshot, there is a huge amount of detail available.
  • 4. Lifetime Earnings The ONS figures for 2008 have average household earnings at £29,500 p.a. Assuming a working life of 47 years, lifetime income therefore is £1,386,500.00 – not including pensions. Assuming a pensionable life expectancy of 12 years, the UK Government will pay you a total of £84,084 state pension.
  • 5. Expenditure COICOP category £ per week % of total UK 2007 Transport 61.70 13.4% Recreation and culture 57.40 12.5% Housing, fuel and power 51.80 11.3% Food and non-alcoholic drinks 48.10 10.5% Restaurants and hotels 37.20 8.1% Miscellaneous goods and services 35.30 7.7% Household goods and services 30.70 6.7% Clothing and footwear 22.00 4.8% Communication 11.90 2.6% Alcoholic drinks, tobacco and narcotics 11.20 2.4% Education 6.80 1.5% Health 5.70 1.2% Total COICOP expenditure 379.80 82.7% Other expenditure items 79.30 17.3% Total weekly expenditure £459.20 Total annual £23,878.40
  • 6. Balance sheet Total Lifetime Income = £1,386,500.00 £29,500 x 47 Total Lifetime Expenditure = £1,408,825.60 £23,878.40 x 59 Balance -£22,325.60 You should note that these are gross figures without tax being applied. So let’s look at what happens when you apply tax & benefits...
  • 7. Tax Using the current UK rates of income tax, the average lifetime income tax paid out of £1,386,500.00 will be £384,060.50 leaving a net balance after tax of £1,002,439.50. Applying the current rates of discretionary taxes and duties to the expenditure items, the average lifetime discretionary tax and duty payable on expenditure is £287,472.78. Gross lifetime tax & duty is therefore £671,533.28 meaning that on average we work for 22.76 years or 48.42% of our working lives to pay the Government.
  • 8. Pensions The annual UK State Pension is £7,007 and retired life expectancy in 2008 was 12 years giving a total state pension received of £84,084.
  • 9. To Summarise Lifetime household income after individual Income Tax & National Insurance is £1,002,439.50 Lifetime State Pension is £84,084.00 Lifetime Household Expenditure is £1,408,825.60
  • 10. Average Estate on Death The average Estate in the UK is £90,000 net of taxes and is left to an average of 5 recipients.
  • 11. Benefits System Snapshot Original Income Top 20% Before Tax & Benefits £72,600.00 Original Income Bottom 20% Before Tax & Benefits £4,700.00 Top 20% After Tax & Benefits £52,400.00 (-£20,200.00) Bottom 20% After Tax & Benefits £14,300.00 (+£9,600.00)
  • 12. Thanks for looking. I’m sure this has left you asking some questions but I’m not the one to give you the answers!