- Latest research shows that despite earning more over the past 12 months, Britons are saving less than in 2017
- On average the nation is saving 7% of their pre-tax income – £1,798 a year, in comparison to 8% last year
- Over half (53%) of savers in the UK do not feel they’re saving enough and a third (32%) of people are not saving at all
- More 45 – 64 years olds are not saving compared to other age groups
- Despite an interest rate rise in November 2017, poor rates have put one in five people off saving (20%)
- The number of people prioritising paying down debt over saving has more than doubled (14%) since last year (6%)
The second annual Savings Index1 from specialist bank, Aldermore, shows that although the average income has increased, the amount being saved across the nation has fallen.
Over the past 12 months, UK adults have been saving an average of 7% of their pre-tax income in comparison to 8% (£1,832) last year. At the moment, the average salary in the UK stands at £24,732, from which the average amount being saved is £1,798 a year, equating to £150 a month.
The savings ratio reduces
Despite salaries increasing, only one in five (20%) savers have increased the amount they are putting away. Just under half (47%) saved the same as last year, while one in six (17%) savers have reduced the amount they put away over the past 12 months (an average of £547 less than last year).
Of those who save, over two in five (43%) say they have reduced the amount they are putting away because they have little or no disposable income left after all their necessary outgoings. Over one in four (28%) say they would rather spend their money on living their life right now, while one in five (20%) think there’s no point in boosting the amount they save because of poor interest rates. This figure has increased significantly from last year (13%), despite interest rates rising in November 2017 for the first time in several years.
Feeling financially secure
Even amongst those who are saving as much as they can, over half still feel like it is not enough (53%). This feeling is prevalent within the pre-retiree group of 45 to 64 year olds as they look to retirement, with 39% feeling like they are not saving enough for a financially secure future.
Interestingly, last year it was the younger age group who felt the most financially fragile but things have improved markedly for them over the past 12 months, with 46% of 18 to 24 year olds feeling like they are saving enough for a secure future. This figure has jumped significantly from 29% last year.
Still not saving
One in three (32%) people did not save any money at all over the past 12 months. This remains level with last year (31%). Across the age groups, again it is those pre-retirees who are feeling particularly squeezed in terms of how much they are able to save, with more 45 to 64 year olds (36%) not saving compared to other age groups.
Increased cost of living is consistently the main reason why people are not saving (55%) across the board. For some others, paying down debt is a priority and a reason why one in seven (14%) are not saving – this is more than double last year’s figure (6%). This is also particularly prevalent amongst millennials, with over half (52%) saying they are concentrating on paying off debt before they start putting money away.
Commenting on the Index figures, Ewan Edwards, Head of Savings, Aldermore says: “The world of savings can be complex. With so many options available it can leave savers wondering, especially in a low rate environment, what to do with their hard-earned cash.
“It cannot be denied that things continue to be hard for savers, with almost a third of the population (32%) currently not saving anything at all. Our new analysis shows that for many, the importance of saving is understood but even though people are putting some money away, there is a pervading sense they are not saving enough.
“This can be discouraging, but we hope we can inspire people to make just a small change in their saving and spending habits. Even saving little and often can go some way to provide protection for the future and the earlier people start saving, the more chance they have of reaching their savings goals in later life.
“At Aldermore we pride ourselves on our range of simple savings products and our consistently good rates, but we would always advise savers to shop around to find the best savings account for their needs – even in a low interest rate environment.”
1The figures are sourced from a nationally representative survey conducted by Opinium Research with a sample of 4,009 online interviews with UK adults, from 23rd to 29th May 2018.
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