A stagnation in personal financial safety nets
Many people across the UK are experiencing increasing financial pressures. The recent report highlights serious concerns, revealing that one in five adults has less than £100 in savings[1]. This key figure has remained steady over the past two years, emphasising stagnation in personal financial safety nets.
For those on the brink, the report paints an even grimmer picture, with 9% of adults reportedly nearing a financial crisis and 2% already firmly caught in one.
Mid-life adults are encountering greater challenges
When analysed by demographics, middle-aged adults emerge as the group most at risk of financial instability. Strikingly, 16% of those in their 40s and 50s are either close to or already experiencing a crisis. Moreover, satisfaction levels among this group regarding their standard of living are alarmingly low, with only 41% expressing contentment.
Despite this concerning situation, there has been a slight improvement for some. The percentage of adults reporting disposable income at the end of the month increased to 59% this year, compared with 49% in 2024. Additionally, average cash savings rose modestly from £15,549 to £15,864.
Many families still feel the pinch
This recovery, however, is not universal. Families with children under 18 continue to struggle disproportionately. Nearly half (47%) of these families report being on the brink of a financial crisis, while others are already adopting coping mechanisms. Among their strategies, 36% admitted to reducing heating usage, 33% to cutting down on social outings and 11% to skipping meals altogether.
Consumers most impacted by these increases are renters, particularly those in the private rental sector. Last year, nearly 72% of single-person households saw rises in housing costs. On average, these costs increased by £218 per month, with private renters facing a sharper rise of £304.
Housing costs squeeze UK renters and homeowners
According to the report, housing costs have also increased for mortgage holders. Over half of those with mortgages reported an average annual rise in payments of £327 per month. Single mortgage borrowers living alone faced a similar increase of £298, with serious implications for the sustainability of their living arrangements.
This income squeeze naturally impacts an individual’s ability to save or keep savings. However, it also has far-reaching effects on long-term financial security, particularly regarding retirement contributions. While only 5% of adults reported reducing or stopping their pension payments, a notable 43% admitted that their retirement plans had been altered by the ongoing cost of living crisis.
Tackling retirement blind spots
Perhaps unsurprisingly, the report highlights a lack of engagement with retirement planning among UK adults. A startling 69% of adults admitted to being unaware of the amount of money they currently have in their defined contribution pension funds. Equally concerning is the finding that over half of those surveyed (52%) had not thought in the past year about how much they would need for a comfortable retirement.
This oversight in planning exposes a broader problem, as many people simply don’t know where to start. With life expectancy increasing and retirement costs rising, it is vital for individuals to think about their financial futures early on.
Practical steps to improve resilience
The report offers several practical suggestions to help households prepare for and manage the storm. Key advice includes reviewing household bills for potential savings and exploring social tariffs that could provide financial relief. Families are also encouraged to draw up a clear and realistic budget, enabling them to plan for rising costs.
A crucial part of enhancing resilience is creating a financial safety net. Even modest savings can shield individuals from borrowing at high interest rates during unforeseen financial crises. Furthermore, it is important to consider how shocks, such as illness or redundancy, could affect the household’s financial stability. Practical measures, such as reviewing employment benefits and exploring income protection insurance, can help reduce these uncertainties.
Preparing for a secure retirement
For long-term stability, planning ahead is crucial. Preparing for retirement – from estimating your desired retirement age to forecasting living costs – can help ease future financial burdens. Tools such as budget planners or apps, as well as checking your State Pension forecast, can provide a helpful starting point.
Ultimately, although external economic conditions are often beyond individual control, proactive measures can greatly enhance financial resilience.
Source data:
[1] All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 4003 adults. Fieldwork was undertaken between 26th February
– 5th March 2025. The survey was carried out online. The figures have been weighted to be representative of all GB adults (aged 18 and above).
This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. The value of your investments can go down as well as up, and you may get back less than you invested.