Research

Savings slump looms as living costs set to rise

Frustrated woman using online banking via a laptop
  • 74% of UK adults are worried about rising living costs with those in mid-life most affected
  • 35% feel more anxious about the future compared with before the pandemic, rising to 42% among people aged 45-54
  • One in five say they have spent the additional savings made during lockdown while 25% predict their lockdown savings will have been exhausted by the end of the year
  • Take stock of your work, wealth and wellbeing needs with Aviva’s Mid-Life MOT app

Nearly three in four UK adults (74%) are concerned by rising inflation and the cost of living, according to research by Aviva which shows the sandwich generation aged 45 to 64 bearing the brunt of anxiety.

With annual inflation having recorded its largest ever monthly rise from July to August[1], 79% of people aged 45-54 are worried about spiralling living costs, including two in five (40%) who are very concerned.

Those aged 55-64 are the second most affected group with 78% registering concern about the upwards trajectory of prices for everyday essentials, as UK petrol prices approach an all-time high[2] and energy bills soar[3].

The findings come at a fragile moment for consumer confidence across the UK, with the end of lockdown causing anxiety to increase as people attempt to put the experience of Covid-19 restrictions behind them.

More than one in three adults (35%) say they feel more anxious about their future compared to before the pandemic, with those aged 45-54 the worst affected (42%). Across all age groups, more than one in four (28%) report heightened stress levels since lockdown ended while a similar figure (27%) say their sleeping habits have deteriorated.

Restricted movements during the first Covid-19 lockdown saw households’ monthly savings temporarily soar to an unprecedented £27.5 billion in May 2020[4]. Most recently, the £9.1 billion deposited with banks and building societies in August 2021 remains high compared to the pre-pandemic monthly average of £4.7 billion.

However, Aviva’s research suggests the end of lockdown is putting renewed pressure on savings habits.  Only 32% feel lockdown helped them to build a bigger savings pot for the future, with those aged 55-64 most likely to disagree (42%).

One in three people across all age groups say they have become more committed to saving since lockdown ended. Yet one in five  say they have already spent the additional savings they put aside during lockdown, while one in four predict their lockdown savings pot will be exhausted by the end of the year.

More than one in three (34%) people aged 45-54 say they are able to save less now than they were before the pandemic, along with 28% of those aged 55-64.

Alistair McQueen, Head of Savings & Retirement at Aviva, comments:

"For anyone approaching retirement, the balancing act between spending and saving can be a big factor in future decisions about their commitments."

“For anyone approaching retirement, the balancing act between spending and saving can be a big factor in future decisions about their commitments. The pandemic experience has prompted many people to stop and think about what matters most in life, and the end of lockdown means thoughts can now start to shift towards revisiting long-term plans.

“Looking at savings trends before, during and after the pandemic, it’s vital we remember decisions to save or not to save should not be a case of ‘all or nothing’. Realistically the exceptional circumstances of being confined in our homes will remain the high water mark of many people’s savings habits, but putting away a smaller percentage of your monthly income where possible can still add up over the long term.

“Keeping your finances under regular review and shopping around for better deals can help you feel in control of your money. Tools like Aviva’s Mid-Life MOT app provide a way to take stock of your work, wealth and wellbeing needs to prioritise and take practical steps to improve your present and future prospects.”

-ENDS-

Sources

[1] Office for National Statistics (ONS), Consumer price inflation, UK: August 2021, published 15 September 2021

[2] RAC, Double pain at the pumps as price of petrol moves closer to record high, published 6 October 2021

[3] Ofgem’s Domestic retail price comparison by company and tarrif type  shows the cheapest energy tarrif as of 28 August  (£1,032) was the highest this measure has been since before January 2012 

[4] Bank of England, Money and Credit – August 2021, published 29 September 2021

Media Enquiries

Fiona Whytock

Retirement, Savings and Investments

Notes to editors:

  • For information on how Aviva is helping our people, customers and communities impacted by COVID-19 visit: www.aviva.com/covid-19-our-response/
  • We exist to be with people when it really matters, throughout their lives. We have been taking care of people for more than 320 years, in line with our purpose of being ‘with you today, for a better tomorrow’. In 2020, we paid £30.6 billion in claims and benefits to our customers.
  • Aviva is invested in our people, our customers, our communities and our planet. In 2021, we announced our plan to become a Net Zero carbon emissions company by 2040, the first major insurance company in the world to do so. This plan means Net Zero carbon emissions from our investments by 2040; setting out a clear pathway to get there with a cut of 25% in the carbon intensity of our investments by 2025 and of 60% by 2030; and Net Zero carbon emissions from our own operations and supply chain by 2030. Aviva has been leading this agenda for decades: Aviva was the first international insurer to go operationally carbon neutral in 2006 and we are champions of renewable energy and energy storage at our offices, allowing us to achieve our 2030 carbon reduction target (70% reduction on 2010 levels) 10 years early. Find out more about our climate goals at www.aviva.com/climate-goals and our sustainability ambition at www.aviva.com/sustainability.
  • Aviva is a Living Wage and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid carers leave and equal parental leave. Find out more at www.aviva.com/social-purpose
  • We are focused on the UK, Ireland and Canada where we have leading market positions and significant potential. We will invest for growth in these markets. We will also transform our performance and improve our efficiency. Our transformation will be underpinned by managing our balance sheet prudently, reducing debt and increasing our financial resilience. We also have strategic investments in Singapore, China and India.
  • At 30 June 2021, total Group assets under management at Aviva Group are £522 billion and our Solvency II shareholder capital surplus is £12 billion. Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.
  • For more details on what we do, our business and how we help our customers, visit www.aviva.com/about-us
  • The Aviva newsroom at www.aviva.com/newsroom includes links to our spokespeople images, podcasts, research reports and our news release archive. Sign up to get the latest news from Aviva by email.You can follow us on:
  • Twitter: www.twitter.com/avivaplc/
  • LinkedIn: www.linkedin.com/company/aviva-plc
  • Instagram: www.instagram.com/avivaplc
  • For the latest corporate films from around our business, subscribe to our YouTube channel: www.youtube.com/user/aviva

      More from our Newsroom