The lack of financial resilience among Britain’s midlife workers has been laid bare by new research, which shows three in ten UK adults (30 per cent) have less than £1,000 in easily accessible savings.
About one in seven (14 per cent) said they had no savings whatsoever, while even among those aged 45-54, an age span usually considered around the peak earning years for workers, more than half (54 per cent) had less than £2,500 available to them should they suffer a loss of income.
The research was undertaken by insurance firm The Exeter, with the results suggesting many individuals or families could struggle significantly in the event of any sudden economic shock.
Most finance experts recommend attempting to gradually build up an emergency pot of savings equivalent to between three and six months’ costs, depending on circumstances - those living with parents and few bills might need considerably less than homeowners with children, for example.
As a very rough guide, with the UK average salary being £35,000, take-home pay from that could be in the region of £2,300 monthly. Using the 70-20-10 budgeting technique, it means three months of absolutely essential costs would suggest a £5,000 savings pot is the minimum required starting point.
However, the 2,000-person survey found that almost half (47 per cent) had less than £5,000 in emergency savings, leaving them vulnerable if they were unable to work, if they were landed with unexpected bills or if their regular costs went up significantly.
“These findings underline how even those in the middle of their careers, often at the peak of their earning powers, increasingly have limited savings to fall back on if they were to lose their income,” said The Exeter’s Jamie Page.
“Illness or injury can strike at any time and, without a financial buffer, even short periods out of work can create financial strain for UK households. It’s never been more important that UK workers have access to financial advice and tools to help them become more financially secure, whether that’s by reducing bills, scheduling regular savings, or taking out protection policies to offer a safety net around their income.”
The concerns over middle aged workers may not be limited to just their bank balances, but wider financial wellbeing too, if additional new research is factored in.
Canada Life has released data showing that one in four (27 per cent) over 55s have no will in place, suggesting a lack of planning and preparation, while J.P. Morgan Personal Investing say that close to half of Millennials (44 per cent) don’t believe that the state pension will continue to exist when they retire.
Given a theoretical departure of the state pension would mean - as it stands - more than £12,000 of annual income could be lost, it puts more pressure on working-age people to save towards retirement, both through cash savings and pension payments.
But with the upcoming Budget suggested to be targeting pension contributions as a means of raising additional Treasury funds, there is the chance people will be put off sacrificing salary now for financial security later, further adding to concerns about peoples’ ability to fund their retirements.
