Coronavirus outbreak leaves one in three worrying about their finances

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Coronavirus outbreak leaves one in three worrying about their finances

27/07/2020
RETIREMENT

But the finances of comfortably well-off households are less affected

Research from retirement specialist LV= highlights how the finances of the UK’s households have been affected by the coronavirus outbreak.

A survey* of the experience and financial position of 4,000 UK consumers reveals that:

  • Nearly a third (31%) of consumers say they are worried about their finances.
  • 28% of those people who have seen their outgoings decrease in lockdown have increasing amounts of money in their current accounts.
  • Relatively well-off people – those with assets (excluding property) of between £100,000 and £500,000 – are less likely to have seen a decrease in income from employment, less likely to have been furloughed and more likely to have seen a fall in their monthly outgoings.

About saving

The coronavirus outbreak and fears about the future have prompted 18% of the general population to review their finances and nearly one in four (23%) have been saving more money during the past three months.

 

Nearly a third (31%) of consumers say they are worried about their finances, and 28% have seen their outgoings decrease in lockdown leaving them with increasing amounts of money in their current accounts.

 

About retirement planning

The coronavirus outbreak has prompted many people to review their retirement plans but they are divided about what they will do next.

More than a quarter (28%) have seen the value of their pensions fall, some 6% of the over 55s are considering taking early retirement while conversely 4% are thinking of delaying retirement.

 

Despite this, only 3% have consulted a financial adviser in the past three months. Fewer than one in ten (8%) have increased the amount of money they are saving into a pension, while one in ten have cut their pension contributions.

 

About part-time workers

Part-time workers have been most affected by the coronavirus outbreak with four out of ten (40%) seeing their incomes fall compared to a quarter (26%) of full-time employed people.

How the comfortably well-off** have fared compared to general population:

  • Although four out of ten (41%) of the comfortably well-off group have seen a fall in their monthly outgoings (compared to 32% of the general population), one in four expect their finances to worsen over the next three months.
  • More than one in four (25%) employed comfortably well-off people surveyed have seen a decrease in their income compared to 29% of the general employed population.
  • But fewer than one in 10 (9%) of this group surveyed have been furloughed compared to 12% of the general population.
  • 35% have seen an increase in the amount in their current account/bank accounts compared to 28% of general population.

Coronavirus has been a huge shock and the lives and finances of millions of people have been disrupted. Our survey of the UK population’s financial confidence, health and attitudes to spending and saving reveals just how worried people are about the future.

Although relatively well-off families have been able to save more as they remain in employment and their monthly outgoings have reduced, coronavirus is further polarising the personal finances of people in the UK and many people – particularly those who are self-employed or working part-time – have been hit much harder.

The big challenge will come when furlough schemes come to an end and it is understandable that many people are saving more money into cash when the future is so uncertain.

 

With the stock market volatility of the last few months and fears about impending job losses, it’s understandable that people are taking a safety-first approach and saving more into current accounts.

 

However, saving too much into cash means you could miss out on future investment growth while cutting pension contributions can cause you to have less money in retirement. Talking to a financial adviser is a good idea before taking money out of investments or drawing an income from a pension.

Clive Bolton, Managing Director of Savings and Retirement at LV=, said:

Notes

* LV= surveyed 4,004 nationally representative UK adults via an online omnibus conducted by Opinium in June 2020.

** Comfortably well-off respondents were defined as those with £100,000-£500,000 investable assets (excluding property) such as savings, cash ISAs, stocks and shares ISAs, Premium bonds, Workplace DC pensions, Personal pensions/SIPPs, Transferable DB pensions, Stocks & Shares, Bonds.