Almost a third of British people have dipped into their savings to cover the cost of living over the past year, according to a report by investment group Schroders.
The figures reveal that 31 per cent of people are using an average of £4,600 of their savings every year, which adds up to about £60 billion.
The recession has been blamed for the concerning statistics. Managing director of Schroders Robin Stoakley said: “The challenging economic environment has seen millions of Britons dipping into their savings to fill their income gap. The amount of capital being drawn down suggests that it is not just rainy day funds that are being drained, but a significant proportion of individuals’ long-term savings. This is particularly an issue for those nearing or in retirement as they have less opportunity to rebuild their savings”.
He continued: “At the end of the day people can manage their savings better and their expenditure but the size of this shortfall per person would indicate to me this is a fundamental problem”.
The report highlighted that more women than men dip into their savings – 34 per cent of women use funds they have put away for a later date while only 28 per cent of men choose to take up the option. About 36 per cent of older people between 55 and 64 said they use their savings to bolster their income, which is a worrying prospect for their future retirement plans.
Experts are warning that people should look into better ways to manage their cash. Some have suggested that older people make use of their skills to set up their own businesses to avoid having to deal with a shortfall when they near retirement. Jasmine Birtles from moneymagpie said: “I think people in their 50s and 60s are so much healthier and stronger and are living longer. I urge them all to have a look at their own earning potential which is much higher than they may realise. We’ve seen a lot recently about people in their 50s and 60s being put on the scrap heap, being made redundant, but I say to them to set up your own business and make use of your skills”.
Take a look at our best buy tables, which compare the different investment accounts available on the market, for some help with getting the best return on your savings.
