New Which? research reveals a nation worried about savings, with those about to retire more likely to be eating into their savings than any other age group.
The latest Which? Quarterly Consumer Report finds that half of people are worried about the level of their savings (49%) with one in five (20%) dipping into their savings to pay for essentials last month. This figure rises to a quarter (23%) of 50-64 year olds – the highest of all age groups – and this group was most likely to use it for food (49%) or a household bill (48%).
One in five (20%) UK households have no savings at all, leaving people vulnerable to financial shocks. Around four in ten (43%) say they would find it difficult to cope with an unexpected expense, but just 26% say they are saving 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.
The current very low interest rates are further compounding this savings problem as there is little incentive for people to save. After the cost of living, savings interest rates are one of the top consumer worries with six in ten people worried (58%), and those about to retire especially anxious (62%).
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.”
Pre-retirement age people are also particularly worried about the level of their savings. Two thirds (64%) of those aged 50-64 are not confident they will have enough money to live comfortably in retirement and last month 16% reduced the amount of their savings – four times as many as those aged under 30 (4%). Only three in 10 (30%) increased their total amount of savings last month – the lowest proportion of all age groups.
Notes to editors:
1. Other key findings of the Quarterly Consumer Report include:
– For the first quarter more people believe that the economy will improve in the next year (34%) than expect their own finances to improve (25%).
– Three in ten (28%) cut back spending on essentials last month – that’s 7.5 million households.
– Only a quarter (24%) say they’re living comfortably on their incomes – but this is higher for men (28%) than women (19%).
– Last month, 33% of people felt their finances squeezed with 3 million borrowing money from friends or family.
Populus, on behalf of Which?, interviewed 2108 UK adults online between 13th and 15th September 2013. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules.
2. Zombie accounts are accounts that are closed to new customers with many paying tiny rates of interest that will never increase, in which savers still have billions of pounds languishing. Of the 1,952 instant access and notice savings accounts and cash Isas on the market, only 390 are open to new savers’ deposits. The remaining 1,562 are zombie accounts closed to new business. These accounts – also known as superseded accounts – often pay pitiful interest rates. Some 607 pay 0.5% or less, while 258 pay 0.1% or less.
3. When Which? launched its Great British Savings Scandal campaign back in 2010, we found that savers were missing out on a shocking £12 billion in interest because their accounts were paying them miserly rates as low as 0.1%. When we updated our investigation last year, we found that this had increased to £12.8 billion.
4. In February 2013, Which? found that the average interest rate on an instant access savings account had fallen by almost 40% in the six months previously. Use the Which? savings booster to find the best account for your savings.
5. Which? Quarterly Consumer Report: This is the sixth report in a series monitoring how people feel about their current financial situation. It includes the Which? Spending Power Index which tracks month on month changes in consumer purchasing power. www.which.co.uk/about-which/who-we-are/quarterly-consumer-reports/
6. The Which? Consumer Insight tracker: An online resource, including the Which? Squeezometer, provides a uniquely detailed picture of today’s consumers. The tracker, updated monthly, has data on consumer spending, attitudes and behaviour, and can be filtered by age, income, gender, region or political affiliation. www.which.co.uk/consumerinsight