Page 13 - Savings Psyche
P. 13

Falling short
The financial impact of regional, age and lifestyle variances

Routes to a better way of saving are emerging                          Mind the gap
through The savings psyche of the UK
research. However, the reality today is that                           Aside from pensions, people are saving on average 3%
issues around trust, risk, financial priorities and                    less per year than they think they should (6% versus an
decision-making paralysis are causing a sizeable                       ideal of 9%). These are relatively low percentage figures,
gap between the amount that people should be                           but in cash terms they become much more significant. For
saving and the amount they are saving.                                 example, someone saving £2,200 per year should be saving
                                                                       £3,300. Cumulatively over several decades, that number will
This is highly significant for employers. The government’s             grow to the point that it will have a detrimental impact on
basic State Pension is simply not enough for most to live              one or more aspects of that individual’s life, from the ability
on, and there is a very real risk of the incentive to retire           to move up the housing ladder to the ability to get through
disappearing for many, leading to a contingent of the                  rainy days or enjoy a good post-retirement lifestyle.
workforce hanging on purely for financial reasons.
                                                                       Perhaps unsurprisingly, it is living expenses (49%),
As may be expected, the picture is not uniform across                  mortgage repayments (32%) and paying off credit cards
the country. House prices and levels of income have led                (28%) that are limiting people’s ability to save money the
to varying levels of savings shortfalls across age groups,             most (Figure 7) and contributing to the shortfall.
regions and personality types.

Figure 7. Biggest financial commitments limiting ability to save

       General living expenses                                                         49%
          Mortgage repayments
         Paying o credit cards                                                    32%
                                                                       28%
      Paying o personal loans
Paying o student loans/debt                                       18%

           Paying o car finance               13%
                            Childcare        13%
                                 Other 2%  12%

                     None of these                                19%

13 The savings psyche of the UK
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