New Which? research reveals a nation worried about savings, with those closest to retirement eating into their savings more than any other group.
The latest Which? Quarterly Consumer Report published today finds that half of people are worried about the level of their savings, with one in five dipping into their savings to pay for essentials during the past month. Worryingly this figure increased to a quarter for those closest to retirement (50-64 year olds), with around half of this group most likely to use it to pay for food or a household bill.
One in five households have no savings
The Which? Consumer Insight Tracker also found that one fifth of UK households have no savings in place at all, leaving this group most vulnerable to financial shocks. A higher proportion (43%) told us that they would find it difficult to cope with an unexpected expense, with only 26% saying they are putting money aside for a rainy day or unexpected expense.
Our analysis of the Office for National Statistics’ Living Costs and Food Survey shows that the average household saves £5.20 per week, or £270.40 per year. But those on the lowest incomes are not saving anything at all, compared to those on the highest incomes saving on average £22 a week.
People closest to retirement most worried about their savings
Our research shows pre-retirement age people are particularly worried about the level of their savings, with two thirds of those aged 50-64 not confident they will have enough money to live comfortably in retirement.
Last month 16% reduced the amount of their savings – four times as many as those aged under 30 (4%) whilst only three in 10 increased their total amount of savings last month – the lowest proportion of all age groups.
Financial Conduct Authority must take action to encourage savers
Which? executive director, Richard Lloyd, said: ‘Our research paints a worrying picture of consumers vulnerable to financial shocks and unable save for retirement, with the rising cost of living forcing them to dip into their savings to pay for essentials like food and bills.
‘We’re pleased the Financial Conduct Authority is looking into the savings market and we want the regulator to take real action to help savers to get the best deal out of the savings market, rather than leaving billions of pounds languishing in accounts paying poor levels of interest.’
Low interest rates offer little incentive to save
Rock-bottom interest rates further compound the problem offering little incentive for people to save.
After the cost of living, savings interest rates emerged as one of the top consumer concerns, leaving six in ten people worried and those closest to retire especially anxious.