The Savings and Income Protection picture across the UK: worrying statistics emerge
by Alexander Beard, on Jul 2, 2014 4:20:09 AM
The average UK household overall is 26 days from the breadline, but this reduces to just 11 days for those of working age (18-64 years old). People estimate their savings will last them 72 days – almost three times the actual deadline to exhausting reserve funds. Wales and the North East have the shortest deadlines in the UK of just 11 days and a third of Britons (33%) still have no savings.
Legal & General’s latest ‘Deadline to the Breadline’ Report reveals that within less than two weeks (11 days) of losing their usual sources of income, the average working age family will be reliant upon state benefits and friends and family alone for financial support once their savings run out. With over 65s included, the overall average deadline is still only 26 days.
The good news is that this ‘deadline to the breadline’ has increased by eight days in the past six months – from 18 to 26 days. The improvement is largely due to more people having some disposable income to save at the end of each month, with the recovery in the economy and the jobs market gathering pace. However, while the improvement is good news, many remain in a precarious situation were they to lose their usual sources of income, with many houses lacking in income protection arrangements or adequate savings plans.
On average, UK households estimate that they could get by on their savings for 72 days – almost three times what the Legal & General figures show. The shocking fact is that the 26 days overall figure only applies to those who have savings. With a third (33%) of the population not having any money put away, this could see a significant number of people on the breadline tomorrow, in the event of a financial disaster.
Other key findings in the report include :
- Households in London have the longest average deadline (79 days) due to a dramatic increase in median savings in the capital over the past six months. Increased savings have also boosted the South East to 44 days, highlighting the disparities between the economic health of these two regions compared to the rest of the UK.
- Median household savings in the North East – which is one of the regions with the shortest deadline, along with Wales – have improved but still stand at just £380. Welsh families are in a similar predicament with £390 median savings.
- As you might expect, household members over 65 continue to lead the way when it comes to saving. This age group has a deadline of 275 days – a staggering 265 days longer than 18-24 year olds. This gap has widened sharply in the past six months following double digit employment growth for over 65s.
John Pollock, CEO, Legal & General Assurance Society Limited, comments:
“It’s encouraging to see that the effects of the economic recovery are starting to trickle down to ordinary households. This third edition of our ‘Deadline to the Breadline’ Report shows that more people have started to save a little something over the past six months. However, it serves as a stark reality check to see that most of us are still in a precarious financial situation – the average working age family is just 11 days away from the breadline.”
“The employment market has strengthened, especially for over 65s as many are delaying retirement. However, earnings are still struggling to keep up with the cost of living, which is keeping many families under a lot of financial pressure. It’s crucial that the heads of households understand the importance of making time for financial planning in order to protect their family’s lifestyle and financial security. As our economic recovery continues to gather pace, now is the time for all of us to take stock and lay the foundations for long-term financial stability.”