Two in three (64%) households that currently save have either already decreased or stopped their savings habit altogether, or expect to have to do so, due to increased living costs.

Over half (58%) of UK savers will need to dip into their savings, with 28% having done so already, according to a new report from Legal & General.

The average working family had £2,400 in savings but estimate they would need £12,100 in the bank to feel financially secure. Currently only three in ten households have £12,100 in savings, with 16% having no savings at all.

Legal & General’s ‘Deadline to Breadline’ report estimates that it would take the average household three years to reach this figure.

There are currently 1.9m households with no money left to save at the end of the month, an increase of 330,000 since 2020.

Bernie Hickman, CEO of Legal & General retail, said: “With the cost of basic essentials on the rise many households will find themselves having to make difficult choices and dipping into savings is likely to become more common. This is a far cry from the five-month financial safety net that people hope for.

“It can be concerning for people to feel like they have nothing to fall back on in times of difficulty.”

The ‘Deadline to Breadline’ report looks at financial resilience, security and engagement of working households across the UK. It includes ‘conversation starters’ for advisers to help discuss sensitive subjects during the cost-of-living crisis.

Legal & General conducted an online survey of 5,021 UK consumers using Savanta’s consumer panel between 28 June and 5 July.

A separate report earlier this month found that over one in five (21%) of over-40s have already pushed back their planned retirement date due to the cost-of-living crisis.

A third (37%) of over 55s say the cost-of-living crisis has made retirement impossible for them in the foreseeable future, according to the research by My Pension Expert.
Many were considering making changes to retirement provision, with 7% having switched pension providers or plans this year to achieve better returns.

Despite concerns over finances, only 13% had spoken to an independent adviser about their retirement strategy.