Should I include my pension in my net worth calculation?

Yes, your pension is a significant asset and should be included in your net worth calculation. For a defined contribution (DC) pension, use the current pot value. For a defined benefit (DB) pension, calculate the transfer value — typically 20–30× the projected annual pension. Example: A £15,000/year DB pension is worth approximately £300,000–£450,000 in transfer value terms. The Pension Lifetime Allowance (LTA) was abolished in April 2024, meaning there is no longer a tax charge for having a pension pot above a certain limit, although new allowances replaced it. Do not forget additional state pension entitlements — the full new State Pension in 2025/26 is £11,502 per year, worth approximately £200,000 capitalised at current rates.

What is a FIRE number and how do I calculate it?

FIRE stands for Financial Independence, Retire Early. Your FIRE number is the amount of invested assets needed to sustain your lifestyle indefinitely without working. The standard calculation uses the 4% Safe Withdrawal Rate (SWR) from the Trinity Study: FIRE Number = Annual Expenses × 25. Example: If you spend £30,000 per year, your FIRE number is £750,000. This assumes a diversified investment portfolio returning average 7%/year with 4% withdrawn annually. The 4% rule has been challenged in low-return environments — some UK FIRE enthusiasts use 3–3.5% withdrawal rates, giving a FIRE multiplier of 29–33× annual expenses. For UK calculations, remember to account for State Pension (available from age 67) which significantly reduces your required portfolio.

How should I value my property in my net worth calculation?

Use a realistic current market value — not the price you paid. Free tools for UK property valuation include: Zoopla (estimated values for most UK properties), Rightmove (comparable sold prices), Land Registry sold price data (HM Land Registry), and local estate agent valuations. For your net worth calculation, use the gross property value in assets and your outstanding mortgage balance in liabilities. Your property equity = current value minus outstanding mortgage. Remember selling costs reduce actual equity realised: estate agent fees 1–2%, solicitor fees £1,000–£2,500, mortgage early repayment charges if applicable.

Should I include my student loan in net worth calculations?

Most UK financial advisers recommend NOT including student loan debt in personal net worth calculations for UK graduates on Plan 2 or Plan 5 loans. This is because UK student loans are income-contingent — you only repay 9% of earnings above the repayment threshold (£27,295 for Plan 2), and the debt is written off after 25-30 years regardless of the outstanding balance. Including the nominal balance (often £40,000–£60,000) would misrepresent your actual financial position. Instead, note the annual repayment impact on cash flow in your financial plan. Plan 1 loans (pre-2012) function slightly differently with a lower threshold.

What is considered a good net worth in the UK at age 40?

The ONS data shows the median household net worth for 35-44 year olds is approximately £147,000 in the UK. However, this is strongly influenced by homeownership. A 40-year-old homeowner in the South East with a family typically has £200,000–£400,000 in total net worth (property equity plus pension plus savings). A renter of the same age might have £50,000–£150,000. A useful rule of thumb: your target net worth at 40 is 3× your gross annual salary. At 50: 5× salary. At 60: 8× salary. These are rough guides for retirement readiness, not absolute standards.

What happened to the pension Lifetime Allowance (LTA)?

The pension Lifetime Allowance (LTA) was abolished on 6 April 2024 by the Finance Act 2024. The LTA had been set at £1,073,100 — any pension savings above this faced a 25% tax charge on income drawdown or 55% if taken as a lump sum. From April 2024, there is no LTA charge. However, new allowances replaced it: the Lump Sum Allowance (LSA) of £268,275 caps the tax-free cash lump sum, and the Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 limits tax-free lump sums on death. If you had LTA protection (Fixed Protection, Individual Protection), review this with your pension provider.

Net Worth Calculator UK 2026 - Assets, Debts & FIRE

Q: What is the average net worth in the UK by age?

Based on ONS Wealth and Assets Survey data (2022-2024), median UK household net wealth by age group: Under 35: £34,000. 35-44: £147,000. 45-54: £302,000. 55-64: £526,000. 65-74: £623,000. 75+: £582,000. Mean (average) figures are significantly higher due to wealth concentration at the top. Note these are household figures — the median individual net worth is lower. UK net wealth is heavily skewed towards property and pension wealth. Property accounts for approximately 35% of household wealth, pension assets 42%, and financial assets (savings, investments) the remaining 23%.

Q: Does the FSCS protect my savings?

The Financial Services Compensation Scheme (FSCS) protects deposits up to £85,000 per person per financial institution (£170,000 for joint accounts). This limit applies per banking group — Halifax, Bank of Scotland and Lloyds Bank are all part of the same group. Separate banks offer separate protection. Investment ISAs are protected up to £85,000 for investment claims. Pension claims are treated separately. For large amounts (e.g. property sale proceeds, inheritance), temporary high balance protection gives up to £1 million protection for 6 months for qualifying life events. Spread large sums across multiple authorised institutions to maximise FSCS protection.

Age Group	Median Household	Mean Household	Property Equity	Pension Value	Financial Assets
Under 35	£34,000	£85,000	£8,000	£14,000	£12,000
35-44	£147,000	£262,000	£66,000	£51,000	£30,000
45-54	£302,000	£524,000	£141,000	£108,000	£53,000
55-64	£526,000	£819,000	£183,000	£204,000	£139,000
65-74	£623,000	£942,000	£207,000	£237,000	£179,000
75+	£582,000	£872,000	£185,000	£228,000	£169,000

Understanding Net Worth: A UK Guide (2026)

Net worth is the foundation of personal financial planning. It is a simple concept — everything you own minus everything you owe — but understanding it in the UK context requires considering property equity, pension wealth, ISA allowances, student loans, and the complex tax landscape that shapes how we accumulate and protect wealth.

What Counts as an Asset in the UK?

Property: For most UK homeowners, the family home is the largest single asset. Use a current market estimate (Zoopla, Rightmove sold prices, or an estate agent valuation). Remember that equity = current value minus outstanding mortgage. Do not confuse your property value with your equity.

Pensions: Pension wealth is the second largest component of UK household wealth, representing approximately 42% of total household wealth. For defined contribution (DC) pensions including workplace pensions and SIPPs, use the current pot value. For defined benefit (DB) pensions (typically public sector or older private sector schemes), calculating the lump sum transfer value is complex — your pension provider can supply this, typically 20–30× projected annual income.

ISAs: Both Cash ISAs and Stocks and Shares ISAs grow free of UK income tax and capital gains tax. The annual ISA allowance is £20,000 per person in 2025/26. Over decades of investing, ISA wealth can be substantial. Use the current account balance for cash ISAs and the current market value for stocks and shares ISAs.

General Investment Accounts (GIAs): Investments held outside an ISA or pension wrapper are subject to income tax on dividends and Capital Gains Tax (CGT) on gains above the annual exempt amount (£3,000 in 2025/26). Include the current market value as an asset.

Property vs Financial Assets: UK Wealth Composition

UK household wealth is unusually concentrated in physical assets — primarily residential property — compared to other developed economies. This creates both opportunities and risks:

Property has been the single most reliable long-term wealth builder for UK households over the past 30 years, with nominal prices rising approximately 4–5% annually.
However, property wealth is illiquid — you cannot sell a bedroom to fund retirement income. Many older homeowners face the paradox of being asset-rich but cash-flow poor.
Equity release schemes (lifetime mortgages and home reversion plans) allow homeowners aged 55+ to access property equity, but at a significant cost — interest compounds and can erode the estate significantly.
Financial assets (pensions, ISAs, investments) provide liquidity and income that property cannot.

The FSCS and Protecting Your Financial Assets

The Financial Services Compensation Scheme (FSCS) is the UK's statutory deposit insurance scheme. Understanding its limits is essential for anyone holding significant cash savings:

Cash deposits: £85,000 per person per banking group (not per account)
Joint accounts: £170,000 per banking group (£85,000 per person)
Temporary high balance protection: up to £1 million for 6 months following qualifying life events (property sale, redundancy, inheritance, divorce settlement)
Investment claims: £85,000 per firm
Important: HSBC, First Direct and M&S Bank share one FSCS licence. Halifax, Bank of Scotland and Lloyds Bank share another. Check the PRA's banking groups list before spreading large sums.

The Pension Lifetime Allowance Abolition (April 2024)

One of the most significant pension rule changes in recent years was the abolition of the Pension Lifetime Allowance (LTA) on 6 April 2024. Previously, pension pots exceeding £1,073,100 faced substantial tax charges. The LTA's removal is particularly significant for those with large DC pension pots or valuable DB pension entitlements. However, new allowances — the Lump Sum Allowance (LSA) of £268,275 and the Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 — now cap tax-free cash. If you held LTA protection (Fixed Protection 2016, Individual Protection 2016), review your position with a financial adviser as the rules changed on abolition.

Student Loans and Net Worth

UK Plan 2 student loans (taken out after September 2012) are fundamentally different from other consumer debt. Key characteristics:

Repayments are income-contingent: 9% of earnings above £27,295 (Plan 2, 2025/26 threshold).
Outstanding balance is written off after 25 years (Plan 2) or 30 years (Plan 5, post-2023 students).
Most graduates on average UK salaries will never repay their full loan balance.
Economists increasingly describe Plan 2 loans as a "graduate tax" rather than true debt.
Recommendation: Exclude student loan from personal net worth calculations unless you expect to repay it in full (typically only if you have a very high income).

FIRE Movement in the UK Context

The Financial Independence, Retire Early (FIRE) movement has grown significantly in the UK. The mathematical foundation is the 4% Safe Withdrawal Rate (SWR), derived from the US Trinity Study, which found a 4% annual withdrawal from a diversified portfolio had a 95%+ success rate over 30-year periods. Your FIRE number = Annual expenses × 25.

UK-specific FIRE considerations:

State Pension: The new State Pension (£11,502/year in 2025/26) can significantly reduce your FIRE number from age 67. If you plan to retire at 40 and claim State Pension at 67, this covers £287,550 of your required portfolio (at 4% SWR).
ISA as FIRE vehicle: Stocks and Shares ISAs are ideal for FIRE — tax-free growth and withdrawals with no upper limit on withdrawals. Accessible immediately, unlike pensions which have a minimum age of 57 from 2028.
SIPP access age: From April 2028, the minimum pension access age rises from 55 to 57. Early retirees need ISA/GIA bridge funds to cover the gap.
LeanFIRE, FatFIRE: LeanFIRE targets £15,000–£25,000/year expenses (FIRE number £375,000–£625,000). FatFIRE targets £40,000+/year (FIRE number £1,000,000+).

Building Net Worth in the UK: Key Strategies

Maximise pension contributions first: Employer matching plus tax relief makes pension contributions 140–200% efficient for higher-rate taxpayers (£100 contribution costs £60 with 40% relief plus employer match).
Use the full ISA allowance: £20,000/year grows completely tax-free. Over 20 years at 7% annual return, £20,000/year invested in an ISA would grow to approximately £820,000.
Pay off high-interest debt first: Guaranteed 20–30% return by clearing credit card debt. No investment reliably beats this on a risk-adjusted basis.
Protect with FSCS limits: Spread cash above £85,000 across multiple banking groups.
Review annually: Net worth should be recalculated at least once per year to track progress and adjust strategy.

Frequently Asked Questions — UK Net Worth

What is the average net worth in the UK by age?

ONS data shows median household net worth ranges from £34,000 under age 35 to £623,000 for those aged 65-74. Mean figures are significantly higher due to wealth concentration. See the full table above for age breakdowns.

Should I include my pension in net worth?

Yes. Use the current pot value for DC pensions. For DB pensions, use the transfer value (approximately 20-30x projected annual income). The State Pension can be valued at around £200,000 capitalised at current rates but is often excluded from personal net worth tracking.

What is a FIRE number?

Your FIRE number is your annual expenses multiplied by 25 (using the 4% safe withdrawal rate). For £30,000/year expenses, your FIRE number is £750,000. When your investable assets reach this target, you can theoretically retire and live off 4% of your portfolio indefinitely.

Does the FSCS protect my savings?

Yes, up to £85,000 per person per banking group. Spread large sums across multiple banking groups to maximise protection. Temporary high balance protection gives £1 million protection for 6 months after qualifying events like property sales.

Should I include my student loan in my net worth?

For UK Plan 2/Plan 5 loans, most advisers recommend excluding them from net worth as they function as a graduate tax (income-contingent repayments, written off after 25-30 years). Only include if you expect to repay the full balance.

What happened to the pension Lifetime Allowance?

The LTA was abolished on 6 April 2024. There is no longer a tax charge for pension pots above £1,073,100. New allowances (LSA of £268,275 for tax-free cash) replaced it. If you had LTA protection, review this with a financial adviser.

What is a good net worth at age 40 in the UK?

The ONS median for 35-44 year olds is £147,000. A rule of thumb for retirement readiness is 3x gross annual salary by age 40. A homeowner in the South East with a family may have £200,000-£400,000 total net worth; a renter might have £50,000-£150,000.

How do I value my DB pension for net worth purposes?

Ask your pension scheme for the Cash Equivalent Transfer Value (CETV). Alternatively, estimate by multiplying projected annual pension by 20-30x. A £15,000/year DB pension is worth approximately £300,000-£450,000 in transfer value terms. Note: transferring out of DB to DC requires regulated financial advice if the CETV exceeds £30,000.

Net Worth Calculator UK 2026

UK Net Worth Calculator 2026

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