7 Dec 2021
One in three people (35%) have seen their disposable income shrink, prompting fears of a leaner Christmas for people across the UK, according to new research from Legal & General Retirement Solutions. Mid-lifers are those most likely to experience the ‘Christmas Crunch’, with 42% of 41 to 56-year-olds (Generation X) feeling the pinch1.
As the cost of living soars, significant hikes in the price of energy bills (30%), transport (19%) and food and drink (16%) are pushing many people across the country into financial difficulty. One in seven UK adults (14%) now worry they won’t be able to afford the Christmas they had expected, as a result. A third of UK adults are cutting back on non-essential treats, such as gifts or boozy nights out and one in five (19%) have had to dip into their savings and investments just to meet their essential bills.
This has prompted concerns that those in midlife, who have been hardest hit, might see an impact on their retirement as they use long-term savings to boost their disposable income. A third of Gen X (33%) have already decreased their savings contributions in the last six months and with costs soaring their incomes are likely to be put under increasing pressure, even before factoring in the cost of Christmas. Separate research2 by Legal & General found that the average over 50s workers had already lost more than £3,000 from their retirement savings pot due to pandemic cutbacks.
Emma Byron, Managing Director, Legal & General Retirement Solutions: “While some are understandably worried about rising Covid cases cancelling Christmas this year, the increased cost of living already poses a threat to the festive season. Families across the UK are having to cut back on non-essentials and dip into savings just to cover their bills, so the cost of Christmas is likely to be an extra worry. This is particularly true for people in midlife, who have seen their disposable incomes hardest hit.
For people nearing retirement, a temporary pause on contributions can have long-term implications on their later life savings. Although the current climate is challenging, we would urge people to maintain their contributions, as even a small amount can make a big difference to your standard of retirement. We offer a range of resources to support those in midlife and to help them get them back on track with their finances.”
1Opinium survey of 4,000 UK adults in the UK was conducted between the 31st October and 3rd November 2021
2 Opinium survey of 2160 UK Over 50's in the UK who have not retired between the 9th and 13th August 2021, 224 of which are saving less towards retirement, compared to before the pandemic.
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which a third is international. We also provide powerful asset origination capabilities. Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2022
Legal & General Retail Retirement’s mission is to help its customers lead longer, healthier, happier lives. We believe everyone should be able to have a ‘more colourful retirement’. The Division comprises the Group’s retirement savings and income, later life lending and care solutions businesses. In 2020, LGRR wrote £910 million of annuity premiums and issued £791 million of lifetime and retirement interest only mortgages.
*at 31 Jun 2021