Article by Phil
From your IFA near me, here are some of the latest facts and figures from the Legal and General “Deadline to Breadline” report published in September 2022.
The report looked in particular at the current financial resilience of families in the UK, given the current cost of living crisis. Some of the findings include:
- Most families think they could survive for 60 days if they suddenly stopped being paid. The reality according to the report is that figure is more like 19 days. Which is down from 24 days when the last report came out in 2020.
- The average household income has increased to £38,000 since 2020. That’s an 11% increase.
- But, after paying essential expenditure families have £700 on average disposable income.
- The average family has just over £2,400 in savings. But almost 40% of families have less than £1,000. 16% have no savings at all to fall back on.
- People in the North east are the closest to the breadline, being only 12 days away. Compared to 28 days in London according to your IFA near me.
- 85% of people overall are worried about the increasing cost of living.
- Only 10% of people are “very confident” that they can retire comfortably.
- 55% of people are “confident” that they have saved enough into their pensions to retire. 45% are not confident.
- This will only grow because 55% of people aren’t currently contributing into a pension scheme.
The overall upshot of these findings is reflected in pension withdrawals. HMRC reported that withdrawals were up by almost 25% in the 3 months from April to June. With over 500,000 savers withdrawing over £3.5 billion from their pension pots. An average of almost £7,000. The main driver seems to be the cost-of-living increases driven by inflation at almost 10%.
Your IFA near me will no doubt explain to you that accessing your pension early has a number of consequences. Firstly, it will reduce the future value for later years. But also, once you withdraw any taxable income your future contribution allowances fall from £40,000 down to £4,000 making it harder to save into your pension going forward.
