New Research Shows How Brits Either Saved Or Spent Spare Money During Lockdown
The coronavirus pandemic hasn’t changed many retirement plans but Brits are desperate to spend any extra savings on a holiday, a new study has found.
Leading national law firm Irwin Mitchell commissioned YouGov to look at whether attitudes towards savings and later life for UK adults aged 40 and above had changed in light of the coronavirus pandemic, where many have seen highs and lows over the last eight months.
When asked about saving habits, the survey found almost one in three (31%) had saved more money than since March than they were able to before the coronavirus pandemic, with another 32% saying their savings had stayed the same.
Of those who had saved more, the most popular option on where to spend their increased savings was on a holiday, with a quarter (25%) of these respondents saying they had saved their spare money as they planned their next break.
Some opted to look after their financial future – both investing and paying off debt sat at 17% each, with this result higher among those aged 40 to 44, while 14% wanted to save money to pass on to their loved ones.
For those who hadn’t been able to save more, the main reasons touted as why, were increases in household bills (26%) or a change in employment circumstances (24%), with similar results across all age groups surveyed.
Expert Opinion“It’s easy to see why saving money towards a holiday was the most popular: after a long time stuck indoors looking at the same four walls, a change of scenery will be very high on the agenda for 2021.
“However, it’s gratifying to see some respondents were paying off debt or investing, which could help to fund a comfortable retirement. These could either be short-term or long-term ways of building wealth that will pay off in the long run, and with a wealth of information now available around investing, it’s easier than ever to get started.
“Start saving a small amount from your wage each month, and put the money into account separate from your normal spending money. Increase the amount you are saving if you can and, if it helps, set yourself a goal. These funds can then be earmarked for any large purchases you have, meaning you only spend when you can afford it. For short-term savings, the return is likely to be less important than ensuring you stick to your saving.
“Post-COVID, consumers should start to feel more confident about spending and also will be keen to do the things they have missed doing such as dining out. Both of these factors should give a much-needed boost to the high street, which will have a knock-on effect to other areas of the economy as well.” Edward Tomlinson - Head of Financial Planning
The research also revealed a lack of reconsideration for later life plans as a result of the pandemic across all age groups, despite the pandemic prompting many to save for short-term money goals.
Of those who plan to retire, most said their retirement plans hadn’t changed because of the pandemic, with 53% of people choosing this option, and overall 72% of all UK adults aged 40+ said the pandemic hadn’t made them reconsider planning for later life in general.
A worrying lack of understanding around financial plans for retirement was also revealed by the survey; when asked about the income and savings they needed for retirement, a massive 48% of those who plan to retire said that they didn’t know what income they need for retirement.
Expert Opinion“It’s of course concerning to see that even with a life-changing event like a pandemic, many people are still not even thinking about planning for retirement, let alone taking actions towards it like saving or investing.
“There is no one-size-fits-all approach when it comes to retirement planning and later life care, especially when there is no solid plan from the Government on funding, so planning ahead as early as possible is absolutely crucial to make sure everything runs smoothly when you retire.
“Knowing how much money you need for later life relies on each individual planning ahead, but the survey results also suggest a wider financial literacy program is needed at a national level to make sure everyone understands from the outset what it is they need for retirement.
“For years we have been calling for the Government to update its social care policies to help the British public in later life, and still await a concrete plan on this front.” Kelly Greig - Partner