Monthly Archives: December 2022

MORE PEOPLE SET TO DIP INTO EMERGENCY FUNDS

Having money set aside can help to provide protection against any abrupt financial changes. A new report has identified one in four working households with savings (28%) have started dipping into them to meet rising living costs. A further 30% anticipate they will need to do so in the next year.

Of those without an emergency fund, the most common reason for not having one was due to wages barely covering the cost of living, and therefore being unable to afford to save.

MONEY TUCKED AWAY

With consumer prices higher than the year before, and with annual household energy costs set to rise, many households will likely have to rely even more on the money they have tucked away. This could see household savings built up during the pandemic reduced.

The report highlighted the average working household currently has £2,400 in savings. However, this equates to less than a month of basic expenditure for the average family if they lost their income and were pushed to rely on their savings.

CURRENT SAVINGS PATTERNS

To feel financially secure, households estimate they need £12,100, or nearly five months’ worth of basic household expenses, set aside. However, only three in ten working households (30%) have this set aside, and pressure to dip into savings will likely see this number fall. Based on current savings patterns, with the average working household saving just over £300 a month, it would take three years to reach the desired financial safety net, and nine years to put aside a year’s worth of essential spending.

INCREASED LIVING COSTS

However, two-thirds (64%) of all households that currently save have either already decreased or stopped their savings habit altogether (31%), or expect to have to do so (34%), due to increased living costs.

There are also a growing number of people who cannot put aside any money; nearly 1.9 million households have no money left at the end of the month, an increase of 330,000 since 2020. This is likely why 16% of households have no savings at all in case of emergency.

DIPPING INTO SAVINGS

With the cost of basic essentials on the rise, many households will find themselves having to make difficult choices and dipping into savings is likely to become more common. This is a far cry from the five-month financial safety net that people hope for.

It can be concerning for people to feel that they have nothing to fall back on in times of difficulty. While dipping into savings is inevitable for some, there are also steps people can take to try to control their costs as much as possible by checking their regular outgoings and subscriptions, and shopping around for discounts and deals.

IT’S GOOD TO TALK

If you are considering dipping into your savings, it might be necessary, but there may be options which have been overlooked. Getting guidance to avoid eating away at your hard-earned savings is essential. If
you require any guidance, to find out more, please contact us.

Signs of more economically active people over the age of 50

Older people in the UK are increasingly returning to work, according to new research.
The cost of living crisis is now affecting many pensioners drastically. The research also found that the proportion of older people who are self-employed has more than doubled over the same period.
It is clear that many older people are choosing to return to the workforce and this trend is likely to continue as the population ages and more people reach retirement age.
The findings from the research identified economic activity levels among the over50s are now at their highest level since the COVID-19 pandemic began.

IMPACTING PENSIONS
Analysis of official statistics appears to show the first signs of a return to the long-term trend of more economically active people over the age of 50 – a decades-long trend which, it said, was reversed by the pandemic.
Spiralling inflation, a cost of living crisis and turbulent financial markets impacting pension funds are causing some people to unretire and find work again. There has been an increase in economic activity (those in work or looking for work) of 116,000 among the over-50s in the past year. More than half of the increase is being driven by men over the age of 65.

RETIRING COMFORTABLY
In some ways, the pandemic forced the hands of many and gave them an opportunity to trial retirement. An early retirement can o(en seem like a
dream when you’re stuck in the thick of the daily grind but, for many, giving up work abruptly can also result in a loss of structure, social connections and purpose, which can leave people feeling lost at times.
The current economic climate means that some people who thought they could retire comfortably during the pandemic are now having to unretire and find work again to bring in some extra income and top up their pensions while they still can. If you’re an older person considering a return to work, there are a number of things to think about.

• Here are some tips:
• Make sure you’re up to date with the latest skills and technologies.
• Older workers may need to brush up on their computer and social media skills.
• Consider flexible working arrangements.
• Many employers are now offering part time, flexible, or remote working options which can be ideal for older workers.
• Don’t be afraid to negotiate.
• Older workers often have a wealth of experience and knowledge to offer, so don’t be afraid to ask for what you’re worth.

Returning to work can be a great way to stay active, engaged and earn some extra income. With a little planning and preparation, it can be a smooth and enjoyable transition.

MILLIONS WANT TO STICK WITH LOCKDOWN LIFESTYLE CHANGES

The COVID-19 pandemic has been incredibly difficult for everyone and made a huge impact on the lives, personal finances and jobs of millions of people. The restrictions introduced during the pandemic were forced on the nation and it was assumed that once they ended, people would quickly return to their lifestyles before lockdown.

However, new research has highlighted how the pandemic has caused millions of people to re-evaluate their priorities, and now many want to keep the changes that they were forced to adopt. Working from home, for example, was something that before the pandemic was done perhaps once or twice a week, if at all.

CLOSE BONDS OF FAMILY AND FRIENDSHIPS

But for many, it has now become common practice and they are now reluctant to return to their commuting lifestyle. Similarly, many people appreciate the convenience of remote parents’ evenings, financial advice and doctors’ appointments and want to continue doing these remotely.

The pandemic, lockdown and accompanying upheaval in our lives have made people appreciate the importance of close bonds of family and friendships and many want the changes introduced during lockdown to continue to give them more time to spend with the people that are important to them.

• 21m say life after lockdown has made them more focused on their family.
• 18m say they want to continue working from home.
• 41% (21m) of those with a family say they have become more focused on their family compared to before the pandemic.
• 38% (15m) of workers have become more focused on work-life balance.
• 32% (16m) have become more focused on hobbies and interests and 45% (23m) are more focused on their health.

INCREASED ACTIVITIES

Many activities that increased during the pandemic – such as working from home, online shopping and remote parents’ evenings – people want to continue. A significant proportion want to stick with changes – such as remote GP appointments – that were forced upon them by the pandemic.

The research looked at activities that increased during the pandemic and found:

• 91% (32m) of those that exercised more during the pandemic want to continue this.
• 79% (18m) of those that worked from home during the pandemic want to continue working from home.
• 76% (23m) of those who did online grocery shopping want to continue.
• 68% (9m) of those that were able to do the school run more during the pandemic want to continue doing it.
• 65% (12m) who received remote financial advice want to continue doing so.
• 58% (10m) of parents that did remote parents’ evenings (conducted by zoom or phone) want to continue them.
• 44% (17m) of those that did remote GP appointments want to continue them.
• Wealthier households are faring best.

ELEMENTS OF LIFE

When people were asked what elements of their life have improved or worsened compared to before the pandemic. UK adults are generally more likely to say their finances, fitness and stress levels have deteriorated compared to before the pandemic. However, some 27% of workers said their work-life balance is better now than before the pandemic, compared to 12% who say it is worse.

BETTER WORK-LIFE BALANCE

The mass affluent group – those with assets of between £100,000 and £400,000 excluding housing – appear to have fared better than the general population. 25% said their fitness was better than before the pandemic compared to 18% of the general population.

27% said their relationship with their partner was better compared to 21% of the general population who had a partner. And 32% of employed mass affluent said their work-life balance was better, slightly higher than the overall working population (27%).

I AM READY TO START A CONVERSATION
Find out how we can help guide your future plans. If you would like to reassess your current financial situation and review your goals, we’re here to listen.