The UK faces a savings gap of an estimated £66bn which will affect the future financial security of ...
The UK faces a savings gap of an estimated £66bn which will affect the future financial security of almost two-thirds of the population (29 million adults) according to a new report released by IFA Promotion.
This new figure dwarfs the original estimate of ABI's pension-only 'savings gap' research published in 2001 which placed the UK savings shortfall at £27bn. With the £27bn pensions gap becoming a £66bn long-term savings gulf, this report highlights the extent to which people are under-providing for themselves across all forms of long-term savings.
IFA Promotion's research is based on a 'conservative' target of 12.5% of income that needs to be saved. Using this benchmark they discovered that six in ten people are saving an average of £2,263 too little per head this year alone, or £66bn in total.
Painting a worrying picture on the state of UK savings, the report reveals that one in three people have no savings at all, and over 50% of people have less than £1,500 saved.
Although IFAs tend to recommend having a safety net of at least three months salary saved up, over a third of people had been unable to save in the three months leading up to the survey.
The research group also devised a savings brake ratio as a barometer of UK savings behaviour which compares how much the nation is borrowing as a proportion of how much the nation is saving over time. This savings brake ratio revealed that we are currently borrowing 65p for every pound we save.
Of the savings that are placed away, 84% of people chose low-paying current accounts to stash away their savings, reveals the report.
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