One in four people (26%) say rising prices have forced them to eat into savings – and one in 20 (5%) say it has forced them to empty their accounts according to research by by Opinium for Hargreaves Lansdown.
The research found that higher rate taxpayers are much more likely to have spent some at 38% and slightly more likely to have spent it all (7%), this is partly because they’re less likely to say they didn’t have any savings when prices started rising (4% compared to 15% overall).
Whilst one in seven (15%) have stopped paying in, and one in ten (10%) said they needed to pay more in – because the cost of the emergencies they needed to cover got more expensive too.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “Millions of people are raiding their savings to cover the cost of rising prices, and millions more are running on empty. By this stage in the cost-of-living crisis, we’re realising the limits of how far we can cut costs. Those who have savings to fall back on are increasingly being forced to spend them in an effort to make ends meet, while those who entered the crisis without emergency savings are left with even bleaker choices.”
“A quarter of people are raiding their savings and one in 20 have spent them all. This is more common among parents with children living at home – with around a third of them spending their savings (32%) and almost one in ten (9%) spending the lot. With more people in the household to look after, it’s increasingly tough to keep on top of your budget.”
“The younger we are, the more likely we are to have dipped into our savings – so 32% of those aged 18-34 have spent some, and 16% of those aged 35-54. Meanwhile. 8% of younger people have spent it all, along with 7% of the ‘squeezed middle’ (aged 35-54).”
“Retired people are keeping their heads above water, with just 20% spending some of their savings and 1% spending it all. This may be because they have fewer outgoings, or because the state pension rose 10.1% in April. Alternatively, they may just be able to cut their costs more to stay within their budget.”
“Even those who have managed to hold onto their savings may have been forced to pay in less – with one in seven cutting savings – rising to one in five of those aged 18-34 and those with children living at home. Given that our emergency savings are meant to be able to cover 3-6 months’ worth of essential expenses, and the price of those essentials has skyrocketed, the fact we need more emergency savings yet can’t afford to pay as much in is worrying. Yet it’s worth highlighting that it’s vital not to lose hope: having some savings is always better than having none, and you can always pledge to revisit your savings when you next get a pay rise – before you have chance to get used to the extra money.”
“However, while things are bad for those who are spending their savings, they’re far worse for those who didn’t have any savings at all when prices started rising. They’ve been forced to make difficult spending choices, run up debts, or go into arrears. One in seven (15%) people are in this position, but it’s more common among the ‘squeezed middle’ at 19%, and renters – at 26%.”
“Singletons are also more likely to have started with no savings, including 22% of those who’ve never married. This will include lots of younger people, who have had less time to build a nest egg. However, 21% of those who are single after a split or divorce don’t have savings either – which may reflect the cost of being single – as well as the cost of the split.”
“This reflects the findings of the HL Savings & Resilience Barometer – which found that in the summer, 10.4% of households were in arrears, which means 600,000 more households had fallen behind when compared to before the pandemic. This has been underpinned by an increase in the number of households falling behind with their utility bills.”