£100k and struggling: money mistakes of the top 5%
Rose is editor at Financial Interest. With over 15 years of writing experience and a passion for personal finance, she focuses on making money less intimidating, more interesting, and occasionally even fun 🙌
Last updated 8th May 2026
15 min read
A high salary is meant to be the golden ticket: more options, financial headspace, a VIP pass to comfort. And yet, many people who cross into "lower high-earner" territory feel surprisingly little of the comfort and security that was supposed to come with it.
So what's going on with the people earning more than ever, yet feeling no better off?
We dig into what it actually means to be a high earner today, why the experience is so much more complicated than you’d think, and – most usefully – how you can keep more of what you earn.
And before you call us a bunch of Jeremy Hunts, we know that anything approaching six figures is a huge salary. But it's also true that these days it doesn’t guarantee the financial security it once did. That's the weird reality we're exploring.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
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What counts as a "high earner" in the UK?
To answer this question, we've got to delve into the official stats.
Median pre-tax earnings for full-time employees in the UK are around £39,000. If you earn more than that, you earn more than 50% of the population.
Some people might also class a high earner as the point at which you start paying higher-rate tax of 40% – at £50,271. That's around seven million of us, or 18%.
Additional rate taxpayers – those paying 45% marginal and earning over £125,140 – make up 3% of the working population. That's only just over a million people.
The ONS considers high earners to be those taking home £26.94+ per hour, which is 1.5x the median hourly pay. Just over 23% of the population fell into this bracket in 2025.
The gap between earning well and feeling wealthy
Earning a lot and feeling well-off are two very different things – especially once geography and social comparison get involved.
Take the HENRYs – High Earners, Not Rich Yet. A term coined back in 2003, it tends to refer to people earning over £100,000 whose salaries are high on paper, yet still feel like they struggle to build real wealth.
Unbelievably, 60% of people earning that amount think they're "average" on the income scale – and those earning even more often believe they're worse off than their social circle:
But how can you earn that much and still feel behind?
Our environment probably has a lot to answer for.
A 2019 study from the IFS found that people with the highest incomes are – unsurprisingly –disproportionately concentrated in London and the South East, which accounted for three-fifths of the top 1% of earners.
But in the capital, to be in the top 1% requires an income of a staggering £650,000.
Elsewhere in the UK, you’d need to earn a comparatively modest £216,000 to be in the top 1%.
To put it another way, the same salary can put you amongst the highest earners in one part of the country, and barely register in another.
The circle we surround ourselves with plays a big role in how we judge our own income, because we tend to compare ourselves with people earning similar amounts and living similar lives.
This is echoed in the opinion polls, too. While Londoners reckon true affluence requires an annual income of £289,000, those in the North think all it takes is a much more modest £80,000.
On top of that, there's a strange little statistical quirk at play. Just as most people's friends tend to be more popular than they are, most people's social circle tends to be richer than they are.
This makes it very easy to feel permanently behind, no matter what your payslip says.
Why it's tough at the top
While a six-figure salary might seem like a ticket to a life of holidays abroad, private schools and care-free Waitrose shopping, in the UK at least, the reality can be pretty different.
The silent pay cut: inflation since 2020
Let's take a trip back in time to 2020 – a world of banana bread, Zoom quizzes, and lockdown haircuts.
Since then, inflation – the cost of everyday goods and services – has soared by 28%. At its peak in 2022, inflation hit 11%. Not quite Napoleonic Wars territory, but still the highest we’ve seen since the 1980s.
In practical terms, that means someone earning £150,000 in 2020 would have needed a pay rise of about £42,000 since then just to keep pace.
| Salary in 2020 | Pay rise needed to keep pace with inflation |
|---|---|
| £50,000 | £14,000 |
| £80,000 | £22,000 |
| £100,000 | £28,000 |
| £120,000 | £33,000 |
| £150,000 | £42,000 |
Then, there's tax.
The 45% additional-rate band was cut from £150,000 to £125,140 in 2023 and has remained frozen ever since. If it'd been adjusted with inflation, it would now be around £233,000.
Every other tax band has been frozen since 2021. That means that as wages rise to keep up with prices, more of each pay rise is pushed into higher tax bands, even when people aren't actually better off in real terms.
So even if you did get that inflation-matching pay rise on your 2020 salary, you're now paying a lot more in income tax every year than you ought to be:
| 2020 salary | Inflation-matched 2025 salary | Income lost due to frozen tax bands |
|---|---|---|
| £50,000 | £64,000 | -£2,600 |
| £80,000 | £102,000 | -£3,000 |
| £100,000 | £128,000 | -£5,000 |
| £120,000 | £153,000 | -£5,850 |
| £150,000 | £192,000 | -£7,800 |
Based on average wage growth data, it's likely you didn't get anywhere near to that level of payrise – yet all your costs have rocketed, and taxes are climbing.
The fiscal drag net is set to snare an extra 112,000 workers into the £100,000+ salary bracket from April – the point at which the personal allowance starts to be withdrawn, creating an effective 60% marginal tax rate on income between £100,000 and £125,140.
And there's another reason plenty of people actively avoid accepting pay rises that would push them over the £100,000 line.
Once either parent earns over £100,000, access to government childcare support starts to disappear. The 30 hours of free childcare for children aged nine months to four can be lost entirely, depending on the child's age. At the same time, families also lose eligibility for Tax‑Free Childcare worth up to £2,000 per child, per year.
Put it all together, and this means that if you had two children and were earning £99,000, a £2,000 pay rise could cost you close to £28,000.
Zoom out, and the tax picture gets weirder.
The UK tax take is heading for around 38% of GDP – the highest since the late 1940s. But paradoxically, in 2024, the effective tax rate on a typical full-time employee was its lowest since the 1970s, and the lowest in the G7.
That difference is made up elsewhere – mainly by leaning harder on higher earners and the increasing number of people dragged into higher tax brackets.
And despite that record overall tax bill, a lot of the basics still feel broken: decades of underinvestment in infrastructure have left us with hospitals that are underequipped and overoccupied, local councils on the brink of bankruptcy, and a transport system that's expensive and unreliable.
For many high earners, that means you're contributing more, yet day to day, it's hard to point to anything that actually feels better as a result.
Cost of living and lifestyle matter more than your headline salary
Most high earners are based in places where everyday expenses have raced ahead of inflation.
In London, housing costs are 107% higher than the UK average of £268,000, monthly rent has increased by an average of £221 over the past three years, and transport prices are now the highest in the world.
And the average household in the South East spends around £200 more per week than those in the North East:
Plenty of costs have also increased dramatically regardless of location. The typical household energy bill has shot up by 43% since 2021, and even the humble supermarket own-brand orange juice has rocketed in price by 134%.
Maybe that's another reason nine out of 10 Brits earning over £100,000 don't consider themselves wealthy – a much larger share of your pay packet can disappear before it's even had a chance to feel comfortable.
These pressures are often compounded by lifestyle choices. Nearly 60% of high earners financially support a partner – something that feels entirely reasonable once you’re on a six-figure salary.
But the tax system isn't kind to single-income households. A lone earner on £100,000 takes home significantly less than two people earning £50,000 each. In fact, the couple would be around £11,000 a year better off, despite the same total household income.
Losing access to government support can be even more punitive in high-cost-of-living areas, too. For a London family with two young children, either parent crossing the £100,000 salary line could mean having to pay an additional £20,000 for childcare out of their own pocket.
In fact, to make up for this loss, a parent would need to earn at least £145,000 before being better off again:
Yet, the psychological sense of safety that comes with a higher salary makes higher earners more likely to accumulate debt that takes up a bigger slice of their income, and to hold expensive, long-term commitments like large mortgages and private school commitments.
You get the picture – it's a bit like being on a luxury cruise that's rapidly taking on water. You're dressed for dinner, but spending the evening trying to keep the engine room dry.
Top five mistakes high earners make
The good news is there's a lot that can be done to mitigate the damage. Let's look at the five biggest mistakes high earners make – and how to avoid them.
Even if you're not earning six figures, most of these tips are well worth a look.
1. Not investing enough
In the UK, we're a nation of chronic under-investors. On the whole, Brits are about three times less likely to invest than Americans – and that's despite all the time they spend stockpiling tinned food and arguing about whether the Earth is flat.
And while you'd think high earners would be better at investing, you'd be wrong.
Hargreaves Lansdown's 2025 Savings and Resilience Barometer shows that the highest-fifth earning households have the highest investing shortfall, with one-third not investing at all outside their pension.
Even high earners who do invest might not be doing so tax-efficiently.
ISAs let you shelter up to £20,000 a year from HMRC, with no tax on the growth or income. But according to the latest HMRC stats, only 40% of people earning over £150k actually use their full allowance. Among those on £100k-150k, it drops to just over 20%:
More baffling still is that a third of top earners didn't put a single pound into their ISA during the last tax year stats are available for.
If you've got your fingers crossed for an early retirement, ISAs are a great way to bridge the gap until you can receive your pension at 57.
2. Not saving enough for retirement
And speaking of pensions, the picture isn't much rosier there either.
Only 39% of the highest earners are on track for a "comfortable retirement" – meaning enough income to maintain the lifestyle they already have. For the highest-earning households, the gap averages £64,800.
What makes this even crazier is that pension contributions are one of the best tax levers high earners have. Paying extra into your workplace pension or SIPP can keep you under the painful £100k tax cliff and reclaim the lost personal allowance.
High earners also benefit from additional rate tax relief, meaning that a £1,000 contribution effectively only costs £550. Because they'll likely be basic-rate taxpayers in retirement, they're then able to withdraw that money taxed at just 20%.
That's the equivalent of buying something on sale and then selling it later at full price, pocketing the difference.
It can also make sense to pay into your partner's pension, especially if they're not working or earning much. They still get basic-rate tax relief on contributions up to £3,600 a year, even with little or no income.
In the long run, building up two decent-sized pension pots is far more tax-efficient than relying on one large one – you get two personal allowances in retirement, two sets of tax bands, and much more flexibility over how you draw your income.
3. Lifestyle creep
No, not that guy who always stands a bit too close to you in the queue at Pret. Lifestyle creep is the slow but steady rise in spending as your salary climbs.
But as the name suggests, it can be tough to notice.
A more expensive bottle of wine here, a spontaneous weekend away there. Before you know it, you're doing your weekly food shop in M&S and the Deliveroo driver knows you by name.
If you're surrounded by higher earners, it only gets worse – the wealthier the area, the more residents spend on just about everything.
This is backed up by the academic data, too. A study led by the University of Portsmouth in 2024 found that as disposable income rises, so does non-essential spending.
One hack to avoid lifestyle creep is to keep your spending aligned with your values, not your salary.
Automate your financial goals before you see the money. When you get a raise, immediately increase your pension contributions, investment transfers, or savings by at least half of that increase. Pay your future self first.
4. Ignoring emergency funds
Ask any financial planner where to start and you'll get the same answer: an emergency fund.
The usual rule of thumb is three to six months' worth of essential expenses, kept somewhere boring and accessible, in case of redundancy, illness or life generally deciding to be difficult.
For high earners, this matters even more. Bigger salaries usually come with bigger fixed commitments, which means a higher monthly "burn rate". When income stops, the runway can be surprisingly short.
And yet, this is another area where high earners don't perform as well as you'd expect.
Among high earners, 44% say they can’t comfortably afford their financial commitments each month, and one in four don't have enough spare cash to cope with an emergency. Even among those earning £150,000+, around 12% don't have sufficient savings to fall back on.
In short: a high income can do a great job of disguising a lack of financial resilience.
The fix doesn't need to be too dramatic. Work out what your household actually needs to keep the lights on each month, then aim to build that up slowly in cash – starting with one month, then three, then six. Keep it separate, keep it dull, and don’t invest it – an easy access savings account is a good place to park this money.
Think of this less as "dead money" and more as buying yourself time, just in case.
We've got a couple of tools to make this a lot easier. Our financial nudges list has a whole load of tips to help you save more money and be disciplined with your finances, while our financial health dashboard lets you track your salary, spending, debt, savings and investments all in one place.
5. Not getting professional advice
A high income comes with plenty of opportunities – including opportunities to make very expensive mistakes.
There are simply too many moving parts – tax thresholds, allowances, pensions, investments, inheritance rules – to wing it without risking something important.
And the data really hammers this home:
- People who get financial advice are nearly £50,000 better off after a decade than those who don’t
- Those who get ongoing financial advice end up with 50% more pension wealth on average.
And it's more than just a matter of practicalities – good advice also takes a huge amount of mental admin off your plate.
High earners often spend years carrying the low-level anxiety of "Am I missing something important?", "Should I be doing more?", or the classic "I'll sort this out later".
Having someone who knows the rules, watches the deadlines, and tells you what actually matters frees up time and headspace.
If you've got £300k+ in investable wealth and could do with a bit of help, consider having a quick chat with Most, our sister company. They help set up independent financial advice or lower-cost financial guidance. Just answer a few quick questions to get started and to book a free consultation.
The bottom line
Earning a lot in the UK doesn't automatically make life feel easier. Sometimes it just gives you more expensive problems. It can be a bit like buying a fancier treadmill: it goes faster, but you still have to do the running.
The trick is making sure more of your hard-earned cash actually sticks around – by investing, protecting your income, and keeping your spending habits in check. Because at the end of the day, it's not what you earn that gets you over the finish line – it's what you do with it, and how much you actually get to keep.
Of course, unless your dream is to flee to a desert tax haven and spend your weekends in an air-conditioned shopping mall with an indoor ski slope – in which case, best of luck to you.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
