Just under one-fifth (18%) of people predict that when they retire, their cash savings will only be £2,500 or less.
However, the research from Nationwide also shows that the average person expects to have savings of £42,244, not including any from a pension pot. An additional 12% predict that upon retirement, they will have savings of over £100,000.
The figures also indicated that 60% of respondents had no spare funds to save each month, whilst 33% described themselves as “just about managing” with their finances, with a lack of money for any unexpected bills. Additionally, 11% stated that they were managing, but paying upcoming bills would be a challenge, indicating a limited ability to put any money aside. Just under a third (31%) stated that they are optimistic about their financial future, suggesting that the majority don’t see their circumstances improving in the coming months or years.
Although these opinions seem to project a negative view, many people still express optimism, despite their uncertain financial future. When it comes to large purchases such as new cars or holidays, 64% stated that they would aim to save rather than use credit. 48% of savers opted for the Cash ISA, with the added benefit of it being tax-free. 20% of respondents believe that their saving levels are high enough, with a further 17% stating that although they could increase their saving, they didn’t want to reduce their spending.
At the start of the 2016/17 tax year, new ISA flexibility rules came into effect. These enabled savers to withdraw from their ISA as well as top-up to the maximum allowance. Before these rules were implemented, withdrawing funds from an ISA would mean that part of the saver’s yearly allowance was lost. Nationwide’s research indicates that out of those who choose to withdraw money from their ISA, 20% will top-up it up to the same level. 38% stated that they made a withdrawal for reasons of emergency or were saving for a specific purchase (31%) such as a property deposit.
Commenting on the research was Tom Riley. The Head of Savings from Nationwide highlighted the importance of regularly putting money aside, no matter how small the amount.
“Many people take comfort from having money put aside that they can access in an emergency or that they can dip into, to fund life’s little luxuries. For some, a regular savings habit is a way of life, but others need more of an impetus to put money aside on a regular basis. This could be the desire to fund a certain purchase, such as a deposit for a home or a wedding, but for others, the kick-start could be having faced a previous situation where they needed money but had none put aside.
“If people are able to save even a small amount, they tend to be more confident about their financial future.”
