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One in five people aged between 55 and 64 aren’t saving anything at all each month, potentially leaving themselves financially vulnerable as living costs continue to soar.
Around 19% of those aged between 45 and 54 save nothing each month, research from friendly society The Exeter reveals, rising to 20% for those aged 55 to 64.
These figures are higher than for any other demographic surveyed, raising concerns about the financial future of those in these age groups, who typically have fewer options to secure a higher income than their younger counterparts.
Overall, 65% of people reported feeling worried that they weren’t saving as much as they would like, suggesting that the problem is not that people don’t know that they should be saving – they simply can’t afford to.
While sobering, this news may not come as a great surprise to many, as the cost of living crisis continues to drive up bills across the board and stretch people’s budgets to the breaking point.
The research reflects this in stark terms, with 81% of those surveyed having reported a change in their spending habits due to the crisis, with high cutbacks on weekly shops, utility usage and leisure activities. More than half (52%) of workers surveyed in the UK expressed concern about paying for food and utility bills, and 44% worried about their ability to pay rent or make their mortgage repayments.
Isobel Langton, chief executive at The Exeter, said: “We wanted this research to examine the many pressures working people in the UK are dealing with, but the level of financial and health fears we have uncovered has revealed the true scope of the challenges they face.”
“With so many people in the UK worried about saving enough and, with living costs continuing to rise, the speed at which someone can fall into debt could also increase.”
How much should I be saving?
There’s no one right answer to how much you should be putting away, but even saving a small amount away each month can make a big difference over the long term.
Many people subscribe to the “50/30/20 rule”, where 50% of your income goes towards necessities, 30% goes towards discretionary items, and 20% goes into savings – but this is obviously easier said than done, and you may not be able to divvy up your earnings so tidily, particularly if necessities take up more than 50% of your income. Our article 5 budgeting methods you might not have heard of explains this rule in more detail and looks at other ways to save.
If you want to save money for an emergency but aren’t sure how much you should be putting away, our article How to build an emergency fund can also help you get started.
If you are interested in opening a savings account but don’t know where to begin, we have a few articles outlining how different types of accounts work and listing some of the best options on the market, updated every week. For example, Best cash ISA rates – which cash ISAs pay the most interest? details the cash ISAs with the highest interest rates currently available. Fixed rate savings bonds explained and Best instant access savings accounts do the same with fixed rate bonds and instant access savings accounts respectively.
The good news for savers is that despite there being no change to the base rate so far this year, savings rates have ticked up recently due to market expectations that interest rates may stay higher for longer.
Clare Stinton, senior personal finance analyst, Hargreaves Lansdown, said: “Higher interest rates are good news for savers looking to make their money work harder. Easy access Cash ISAs are offering inflation-busting returns around 4.2-4.5%, and interest on one-year fixes is as high as 4.65%. Savers can also strike a balance between returns and flexibility, with short-term fixes of around six months also on the market.
“Higher interest rates in today’s higher tax environment makes using your ISA allowance more important than ever. Any savings interest earned inside an ISA is tax-free. Interest earned outside an ISA over the personal savings allowance – that’s £1,000 for basic rate taxpayers and £500 for higher rate taxpayers – will be subject to income tax at 20% and 40%, respectively. Additional rate taxpayers pay tax on every penny of interest outside of an ISA, at 45%. And from April 2027, tax rates on interest will rise by 2% for 22% for a basic rate taxpayer; 42% for higher rate taxpayers, and 47% for additional rate taxpayers.
“If you’re considering a longer-term fix, only tie up money that you won’t need soon. A sensible approach can be to split your savings, locking away a portion to secure higher rates, while keeping some funds easily accessible for life’s unexpected expenses.”
I can’t save money - what are my options?
You shouldn’t feel at fault if you are struggling to save money or facing debt, particularly given current difficult financial circumstances. Our article Four ways to save on a tight budget can give you some ideas on how to put a little money away each month.
If there is no way you can trim your outgoings so you can save a bit each month, there are resources and options available that may help you if you suddenly find yourself needing a cash buffer.
Our article How to raise emergency cash contains some ideas for building up quick funds, along with the advantages and disadvantages of each of these options.
For more ideas on how to reduce your outgoings and stay afloat, visit our sections on ways to save money and cost of living resources.
Many people feel embarrassed reaching out for help if they’re struggling with debt or other financial problems, but remember that it is nothing to be ashamed of, and the earlier you seek help, the better. Our articles Are money worries affecting your mental health? and How to take control of your debts have lots of information on where to get help managing your money.
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