There is a widespread wealth perception gap in the UK, with people underestimating their earnings relative to their peers by an average of 30 percentage points, a report from HSBC has found.

Nine in 10 people earning £100,000 a year or more do not consider themselves to be wealthy, with the wealth perception gap found to be particularly pronounced among higher earners.

The report, which sought to analyse the UK wealth landscape, highlighted that while those being paid £100,000 or more were in the top 4 per cent of UK earners, only 1 per cent of the population described themselves as wealthy.

On average, people felt that an annual income of £213,000 was what was required to be considered wealthy, but this figure rose to £724,000 among higher earners.

Despite being in the top 4 per cent, high earners position themselves in the top 52 per cent relative to the rest of the UK population, which HSBC said highlighted a “significant disconnect” between perceived and actual financial position.

This is despite HSBC UK Premier customers having five times more savings and four times more money coming in and out compared to most HSBC UK customers.

The report noted that wealth perception did not just differ across income levels, with regional differences also identified.

Londoners surveyed believed it took more than £289,000 a year to be wealthy on average, compared to £80,000 in the north east.

Higher earners often had ambitious financial goals, but only 44 per cent felt they were on track to achieve them. This figure fell to just over one in five (21 per cent) of the general population.

While many did not feel on track to meet their goals, 95 per cent of higher earners and 85 per cent of the general population felt their financial goals were achievable.

Looking at the financial ambitions of higher earners, 48 per cent were seeking a comfortable retirement, 30 per cent were aiming for home ownership, and 20 per cent were looking to make significant home improvements.

However, the need to prioritise more immediate costs (27 per cent), insufficient savings (11 per cent), and unpredictable income (14 per cent) remained challenging, even among higher earners.

“HSBC UK's findings reveal a paradox: despite having high earnings and ambitious financial goals, many mass affluent individuals still don’t feel wealthy,” stated financial psychotherapist, Vicky Reynal.

“This disconnect underscores the psychology behind people’s perceptions of wealth.

“Anxieties about rising costs, inadequate savings, and the pressure of social comparison create a sense of scarcity, even when objective wealth exists.

“By redefining wealth beyond the bank balance, focusing on our achievements, reducing unhelpful comparisons, and prioritising financial actions within our control, people can move confidently toward the future they aspire to."

The report also delved into attitudes towards signifiers of wealth, with 51 per cent of the general population identifying owning a private jet or yacht (48 per cent) as the main signifier.

Meanwhile, higher earners were more likely to consider retiring early (48 per cent), frequently travelling abroad (45 per cent), or having investments (54 per cent) as more relevant signifiers.

Investments were found to be “critical markers” of wealth, with 49 per cent of the general population identifying them as a signifier of wealth.

While 55 per cent of people earning £100,000 or more had investments, this figure dropped to 18 per cent amongst the general population.

“Wealth is a deeply personal concept, that is dependent not only on people’s objective financial position but also on how they feel about money,” commented HSBC UK head of premier wealth, Xian Chan.

“People often evaluate their sense of wealth in relation to how financially secure they feel, and how close they are to being able to achieve their financial goals. But the key for everyone is in early preparation.

“Investments remain the most significant signifier of wealth, and adding to those gradually over the long-term is a crucial step for building towards prosperity.

“Starting to save even a small amount regularly, and as early as possible, while developing regular habits, is one of the most important things that we can do to plan successfully for our financial futures.”

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