One in eight Britons have more than £50,000 in savings… how do YOU compare?

Concerned about your savings? Discover how your emergency fund and investments compare with others in your age group and income level. This analysis of UK savings habits reveals whether you are building financial resilience or slipping behind.

Benchmarking Your Savings: How Do You Measure Up?

It’s a common tendency to compare our lifestyles with those around us – homes, vehicles, vacations, and possessions. However, assessing our savings and investments presents a less tangible comparison.

Amidst a persistently high cost of living, discussions around emergency funds and optimal investment strategies are frequent. But where do you stand relative to your peers in terms of financial resilience?

This analysis, based on data from the Department for Work and Pensions (DWP), examines recommended savings amounts based on age, salary, and marital status to help you understand where you stand financially.

Analyzing National Savings Distribution

Financial experts often suggest aiming for an emergency fund equivalent to three to six months of your income to manage unexpected expenses.

Ideally, this represents the minimum savings threshold. Many aspire to exceed this for life goals, yet DWP data indicates that 20% of Britons possess less than £100 in savings.

A further 18% have between £100 and £1,500 saved. Comparatively, this is significantly less than the average monthly take-home pay in the UK, which is approximately £2,297 for someone earning just over £34,000 annually.

Only one-third of the population holds over £16,000 in savings, while 23% have accumulated more than £30,000.

An additional 6% have savings between £30,000 and £50,000.

The top savers, exceeding these figures, comprise 12% with £50,000 to £200,000, 3% with £200,000 to £500,000, and 2% with £500,000 or more in savings.

Income significantly influences savings capacity. However, even high-income earners can have insufficient savings.

Among individuals earning over £2,000 weekly, 35% held more than £50,000 in savings, but 21% had less than £3,000 saved.

Preferred Savings Methods: ISAs, Premium Bonds, and Investments

Individual Savings Accounts (ISAs) are the most favored savings vehicle, likely due to their tax advantages, with nearly a third of people utilizing them.

ISA popularity increases with age. Only 19% of 16- to 24-year-olds use ISAs, compared to approximately 40% of those aged 75 to 84 and 39% of 65- to 74-year-olds.

For other age demographics, ISA usage ranges from a quarter to a third.

While older individuals favor ISAs, cohabiting pensioner couples are the most likely demographic to utilize them, with 50% holding funds in these accounts. This contrasts with 24% of cohabiting couples with children and just 11% of single parents with children.

Age significantly impacts Premium Bonds preference, which are considerably less popular among younger generations.

Only 3% of individuals under 24 hold Premium Bonds, rising to 9% for 25- to 34-year-olds and 10% for those aged 35 to 44.

Conversely, almost a third (31%) of 75- to 84-year-olds hold Premium Bonds, followed by 29% of those 85 and older and those aged 65 to 74.

Investments are more appealing to younger individuals than Premium Bonds, with 7% holding them. However, this figure remains lower than older demographics.

Around 15% of individuals aged 45 to 74 have some form of investments, with a slight increase in this figure among older age brackets.

This reaches 18% for those between 75 and 84.

Higher earners are significantly more inclined to invest than lower earners. 30% of individuals earning over £2,000 per week are investors, and over 15% of those earning over £1,000 also invest, with investment rates increasing with income.

Among the highest earners (over £2,000 per week), over half also held ISAs, and almost a third possessed Premium Bonds.

Widespread Savings Shortfalls

Data reveals that one in ten families have less than £100 in savings, while 18% have saved only between £100 and £1,500.

Single parents are particularly affected, with 34% having no savings and 25% having less than £100.

A further 23% of single parents have between £100 and £1,500, indicating that only 18% have over £1,500 in savings accounts.

For cohabiting couples with children, approximately 29% have savings between £100 and £1,500.

Carol Knight, Chief Executive of TISA, commented: “These figures underscore the ongoing financial pressures faced by numerous families. For some, saving and investing are understandably not immediate priorities.”

“However, consistently setting aside even modest amounts can create a vital financial safety net and enhance long-term financial well-being.”

“Effective financial education is crucial, empowering individuals to make informed financial choices and understand available products that facilitate savings growth.”

“The Government’s Help to Save scheme is a valuable resource for low-income households seeking to build savings.”

“Yet, its potential remains underutilized.”

She added: “Implementing payroll savings schemes could encourage millions more to save regularly, and reviewing pension adequacy is vital to ensure automatic enrolment secures sufficient retirement savings.”

Almost all adults (92%) have a bank current account.

Concerningly, 14% of single men without children lack bank accounts, and 9% of UK families also lack bank accounts.

Savings account ownership is even lower. Only 11% of single parents have an ISA, and just 9% of all adults hold stocks and shares.

Historically, investing has yielded greater returns than cash savings, but it is crucial for investors to commit funds they can leave untouched for at least five years.