"I'm earning £500k at a London hedge fund & am concerned about my future"
As the British government casts around for methods of plugging its budget deficit, I want to share my perspective on why it's possible to feel financially insecure even on a high income. I appreciate that this may not be popular,
I've worked in financial services, both in banks and hedge funds for over two decades. I'm currently earning more than £500k ($674k) a year. My wife and I have three teenage children, and she works as a teacher.
£500k is a lot of money. If I could be assured of earning this amount for the foreseeable future, I would feel confident in our financial security. However, a lot of financial services jobs don't work like that. My position is precarious; I am on a short term contract, and it could be cancelled at any moment.
A significant proportion of my income - over £200k a year disappears in income tax. I need to contribute to my pension, which is so low that I won't be able to afford to retire for over a decade, even though I'm in my 50s. However, I also need to pay down my debt.
How did I end up in this situation? Repeated layoffs, periods out of the market, and the cost of education are to blame. A lot of the money I made before the financial crisis disappeared when the shares of the bank I was working for collapsed. I lost all my deferred bonuses, and it was impossible to hedge against that. Since then, it's been an uphill battle financially.
As is often the case, I've been made redundant multiple times, and each time I have been forced to spend my savings while I look for a new job. Last year I had to dip into my pension. And then my children have cost me over £40k a year each in school fees; I put them into state schools for a while, but the standard of education was so low that I took them out and went private again.
As I get older, my wife and I are considering the best course of action. We have a house in London, but it still has a large mortgage which we have been unable to pay down. We also have a rented flat, but it has problematic tenants and costs me more than it brings in. We could sell one or both of these properties, but the London property market is stagnant, and we see similar places sitting on the market.
We're thinking of going to Abu Dhabi. The heat there is insufferable in the summer and the standard of living is lower than in London, but we'd have to suck it up. A few years of tax-free income seem the only way of getting ourselves out of this financial situation.
The UK tax system is already very progressive. People keep talking about the rich paying their fair share, but I already pay my fair share and I don't see why I should pay more. I know it sounds absurd to be concerned when you're earning £500k, but this is my experience. There's no security to my income. I work extremely hard and have very high debts. It is not as easy as you would think.
Hasan al-Neman is a pseudonym
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