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Chief Executive Officer, Legal & General Retail
Our research revealed that people overestimate (by nearly six weeks) how long they could fund basic living costs (such as housing costs, loans/ credit card repayments, utility bills and food) if they lost their income.
Within the context of a ‘cost of living crisis’ – cutting down household spending has become the norm, but the 5 million poorest workers in the UK have no financial safety net if they lose their salary.
In the UK, households have average savings of £2,431 and debts of £610. Accounting for average daily expenses of £93, this would see the average household run out of money in less than three weeks if they were to lose their income.
Our recent Rebuilding Britain Index research also found that the cost-of-living crisis is increasing inequalities between different parts of the country, disproportionately affecting households in areas where there is a greater need for levelling-up strategy. This could also lead to income poverty and health inequality in the UK – trends we’ve seen in work with Professor Sir Michael Marmot.
“Our latest research presents a challenging picture for working households across the UK. We often talk about managing money month-to-month but, as our findings indicate, for some it’s a case of day-by-day. It may feel overwhelming, but we encourage people to do what they can, so they are best prepared for a further squeeze on finances.”
Older workers in the UK (55 to 65 years old) tend to have higher levels of savings they can draw on, meeting their expenses for an average of 99 days in the event they lose their income. However, these households are also the most likely to overestimate their safety net, assuming they can manage for at least 180 days. This raises concerns around the effects of aging population in the UK (with people living longer), and related ageing population problems as older households have less time to build their savings back up before retirement and typically find it harder to find new roles following redundancy – further reinforcing the need to invest in levelling up UK.