Lack of savings makes goals out of reach for many

19 Sept 2017

The latest research from Aldermore’s 2017 Annual Savings Tracker reveals that over three fifths (61%) of the nation are saving, putting away an average of £2,748 a year. However, while it seems the savings message is recognised by the majority of people, the rate at which the nation is saving means that it could take considerable time to reach long term goals such as buying a house and significant home renovations.

Of those who are saving, almost three quarters (74%) are aiming for a specific goal. Younger savers in Britain are the most goal-orientated, with nearly nine in ten (87%) of 18-24 year olds wishing to reach a specific target, compared to only half (55%) of 65-74 year olds. However the nation isn’t saving consistently for these goals with the majority (37%) only putting money away if they have some left at the end of month, compared to under a third (29%) who save a fixed amount each month regardless.

Overall, the most common long terms goal in the UK (for 29%) is saving for retirement. The other long term priorities the nation has set itself include:

Long term savings goals  % of respondents
Retirement 29%
Buying a house 20%
Holiday of a lifetime 19%
Home renovations 16%
Children 14%
Provide children/relatives with an inheritance 14%
To pay off mortgage 12%
University fees 8%
A wedding 6%
A second home / holiday home 6%

 

Despite the nation making the important decision to save, it’s apparent there is a savings gap between reality and aspiration. Based on what Brits are saving on average, it will take a significant amount of time to reach the goals set.  For example, for those who have set the goal to renovate their home, the average cost of improving a kitchen is now £17,690, meaning it could take over six years to save for this.

For the younger generation, their primary goal is a deposit for their first home with over three in five (62%) aiming for this. With the average deposit for first time buyers now standing at nearly £50,000, this age group would need to set aside money for 21 years to reach the first rung of the housing ladder based on their average annual savings of £2,367.

The research also reveals the short term saving goals set by the nation. Saving for a holiday proves to be the number one choice for two in five savers (40%), and over a quarter (28%) is saving to provide a buffer for unexpected expenses.

Short term savings goals  % of respondents
Holiday 40%
Buffer against unexpected expenses 28%
Home improvements 22%
Everyday living 16%
A new car 15%
Luxury goods 11%
A big ticket purchase (like a new boiler/fridge) 9%

Commenting on the findings, Simon Healy, Managing Director – Savings, Aldermore says: “It is encouraging to see that, despite the low interest rate environment, three fifths of the nation saves on a regular basis. Of these savers, a significant proportion has a specific goal in mind, highlighting that people are planning for their financial future. However, it’s clear that the current rate of saving will result in it taking longer than people expect to achieve their goals.

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