Are you on track with your savings or lagging behind?
Understanding how your savings stack up against the average can be a real eye-opener.
My comprehensive guide on the ‘Average Savings by Age in the UK’ offers you a benchmark to evaluate your financial health, providing insights on how people in different age groups are saving.
Table of Contents
What Are the Average Savings in the UK?
In 2023, the typical individual in the UK has amassed £17,773 in savings. Notably, a considerable discrepancy exists between genders; women average £11,698 in saved funds, while men have around £23,951. Financial experts commonly advise having a safety net equivalent to at least three months of living expenses.
Source: Finder
Average Savings by Age in the UK
| Age Group | Average Savings (£) |
|---|---|
| 18-24 | £2,533 |
| 25-34 | £4,775 |
| 35-44 | £6,751 |
| 45-54 | £14,591 |
| 55+ | £35,607 |
What are the average savings of a 20-year-old UK?
The average savings for a 20-year-old in the UK is around £2,533. This figure is a general estimate and individual savings can vary widely due to factors like income, expenses, and financial habits. It’s important to note that this is an average and not necessarily indicative of what every 20-year-old in the UK has saved.
What are the average savings of a 30-year-old UK?
The average savings for a 30-year-old in the UK is around £4,775. This figure is a general estimate and individual savings can vary widely due to factors like income, expenses, and financial habits. It’s important to note that this is an average and not necessarily indicative of what every 20-year-old in the UK has saved.
What are the average savings of a 40-year-old UK?
The average savings for a 40-year-old in the UK is around £6,751. This figure is a general estimate and individual savings can vary widely due to factors like income, expenses, and financial habits. It’s important to note that this is an average and not necessarily indicative of what every 20-year-old in the UK has saved.
What are the average savings of a 50-year-old UK?
The average savings for a 50-year-old in the UK is around £14,591. This figure is a general estimate and individual savings can vary widely due to factors like income, expenses, and financial habits. It’s important to note that this is an average and not necessarily indicative of what every 20-year-old in the UK has saved.
What are the average savings of a 60-year-old UK?
The average savings for a 60-year-old in the UK is around £35,607. This figure is a general estimate and individual savings can vary widely due to factors like income, expenses, and financial habits. It’s important to note that this is an average and not necessarily indicative of what every 20-year-old in the UK has saved.
Average Savings per UK Household
Based on Finder’s study, UK households had an average savings balance of £7,509 in 2022, up from £6,757 in 2020.
Meanwhile, the median annual household savings stand at £2,160, indicating that half of UK households save more and half save less than this number annually.
Yearly Savings Trends
The typical yearly savings for a household is around £5,403, exposing a significant financial gap between the UK’s affluent and less affluent citizens. Households with lower incomes managed to save an average of just £95 in 2022, while those in the higher income bracket saved around £6,978.
Gross Average vs Median Savings The gross average savings for households, which include various financial assets like stocks, bonds, ISAs, and bank accounts, stands at an inflated £76,301. This figure is skewed upwards due to a small percentage of households with substantial savings.
A more grounded measure is the median gross household savings, which was £12,500 in 2022, up from £11,000 in 2020. Interestingly, 25% of UK households saved less than £2,100 that year.
Monthly Savings Analysis
While the median monthly savings rate is roughly £180, the average rate is much higher at £450, skewed by households with higher saving rates. The top quintile of UK households save on average £1,817 per month, while the bottom quintile does not save at all, theoretically drawing £352 a month if they had savings.
The Limitations of Averages
The average figures can be misleading. For instance, if you place a billionaire in a room with a thousand people living in poverty and calculate their average net worth, each impoverished person would statistically be a millionaire. This example highlights the stark financial divide between the rich and the poor, not only in the UK but globally.
Financial Preparedness
If you’re in a position to save, seize the opportunity. Aim to accumulate at least three months’ worth of your monthly expenses to attain a sense of financial security and peace of mind.
UK Average Retirement Savings
In the UK, individuals aged 65 and over typically have around £113,600 saved for retirement, taking into account various financial instruments like cash ISAs, current and savings accounts, trusts, as well as stocks and bonds. The median retirement savings is notably lower, standing at £25,700.
According to a study by Finder, nearly half of the population (47%) have actively saved for retirement, while 23% save sporadically. About 13% have previously saved but no longer continue to do so. Meanwhile, 12% plan to start saving for retirement and a small 5% have never saved for retirement and have no plans to start.
Why It Is Important to Save?
Saving money is crucial for various reasons, including financial security and peace of mind. Having a savings cushion allows you to handle unexpected expenses, such as medical emergencies or home repairs, without going into debt.
Additionally, savings enable you to achieve long-term goals like buying a home, starting a business, or retiring comfortably, making it a foundational element of overall financial health.
What Should You Try to Save Each Month?
The amount you should try to save each month can vary based on your income, expenses, and financial goals. However, a common recommendation is to save at least 20% of your income each month. This 20% can be divided into various saving objectives, including emergency funds, retirement accounts, and other specific goals like buying a home or going on vacation.
It’s important to adjust this percentage according to your individual circumstances and to review your savings plan regularly to ensure it aligns with your changing needs and objectives.
Saving Targets by Age
How much savings should I have at 20 in the UK?
The amount of savings you should have at age 20 in the UK can vary based on your financial goals and living situation. However, a general rule of thumb is to start with an emergency fund equivalent to three months of living expenses. According to UK statistics, the average savings for individuals aged 18-24 is around £2,533. Building an emergency fund and starting to save for long-term goals like education or home ownership at a young age can set the stage for financial stability later on.
How much savings should I have at 30 in the UK?
The amount you should have saved by 30 in the UK depends on various factors such as income, expenses, and financial goals. However, a common guideline is to have the equivalent of one year’s salary saved for retirement, in addition to a liquid emergency fund of 3-6 months of living expenses. According to UK statistics, the average savings for individuals aged 25-34 is approximately £4,775. To better prepare for future financial obligations like home ownership or family planning, aim to exceed this average if possible.
How much savings should I have at 40 in the UK?
The amount of savings you should have by age 40 in the UK varies based on your individual circumstances and goals. A common guideline suggests having at least three times your annual salary saved for retirement, in addition to an emergency fund covering 3-6 months of expenses. According to UK data, the average savings for people aged 35-44 is around £6,751. For a more secure financial future, consider aiming to exceed this average while also exploring investment options to grow your savings.
How much savings should I have at 50 in the UK?
The recommended savings by age 50 in the UK can vary, but a general guideline suggests having at least six times your annual salary saved for retirement. Additionally, an emergency fund of 3-6 months’ worth of living expenses is advisable. The average savings for people in the 45-54 age group in the UK is approximately £14,591. Tailoring your savings to your specific life circumstances and retirement goals will provide a more accurate target.
How much savings should I have at 60 in the UK?
By the age of 60 in the UK, financial advisors often recommend having at least eight times your annual salary saved for retirement. Additionally, a cushion of 3-6 months’ worth of living expenses in an easily accessible emergency fund is suggested. The average savings for individuals 55 and older in the UK is around £35,607. However, the actual amount you’ll need depends on your lifestyle, debts, and planned retirement age.
How much savings should I have at 70 in the UK?
The amount of savings you should have at 70 in the UK can vary based on your lifestyle, expected medical costs, and other personal circumstances. However, financial experts often recommend having at least a few years’ worth of living expenses set aside in easily accessible accounts. This is in addition to any pension or social security income you may receive. Some also suggest a ’25x Rule,’ which means having at least 25 times your annual expenses saved by the time you retire, though your needs may vary.
Ways to Save Money in the UK
Saving money in the UK can be achieved through a mix of budgeting, conscious spending, and smart financial planning.
Here are some effective ways to save money:
Budget Wisely
- Set a Budget: Understand your income and expenses and allocate money accordingly.
- Track Expenses: Use apps or spreadsheets to keep an eye on where your money is going.
Cut Costs on Essentials
- Switch Energy Providers: Shop around to find cheaper gas and electricity.
- Compare Insurance: Don’t auto-renew; compare quotes for car, home, and other insurances.
- Use Public Transport: Limit car usage, and opt for public transport where possible.
Smart Grocery Shopping
- Buy Generic Brands: Often just as good but cheaper.
- Use Coupons: Make the most of discounts and promotional offers.
- Bulk Buy: Non-perishable items are often cheaper when bought in large quantities.
Dining and Takeouts
- Cook at Home: Significantly cheaper (and often healthier) than dining out.
- Limit Takeaways: Opt for homemade versions of your favorite takeaway dishes.
Subscription Services
- Cancel Unused Memberships: Such as gyms, magazines, or streaming services you rarely use.
- Bundle Services: Where possible, bundle internet, phone, and TV plans.
Shopping Smart
- Second-hand Goods: Consider buying used items or refurbished goods.
- Wait for Sales: Items are often significantly discounted during holiday or seasonal sales.
Entertainment and Lifestyle
- Free Events: Look out for free entertainment options around your city.
- Exercise Outdoors: Skip the gym and get your dose of physical activity at a park or nature reserve.
Saving and Investing
- High-Interest Savings Account: Get the most out of your savings with a high-interest account.
- Consider Investments: Speak to a financial advisor about low-risk, long-term investment options.
- Use Tax-Free Options: Take advantage of ISAs for tax-free interest on your savings.
See also: How to invest money UK
Extra Income
- Freelancing or Part-Time Jobs: Additional income can help you reach your savings goal faster.
- Sell Unused Items: Platforms like eBay, Gumtree, or Facebook Marketplace are great for this.
By implementing a combination of these strategies, you can make significant strides towards saving money in the UK.
Factors That Affect Savings in the UK
Several factors can influence the ability and propensity to save money in the UK:
- Income Level: Higher income generally enables more savings, although it doesn’t necessarily guarantee higher saving rates.
- Employment Status: Being employed with a stable income often correlates with higher savings, compared to those who are unemployed or in precarious employment.
- Cost of Living: Regions with a higher cost of living, like London, can make it more challenging to save money.
- Age: Different life stages come with varying financial priorities, affecting saving behaviors. For example, younger people may save for education or a home, while older individuals may focus on retirement.
- Economic Conditions: Economic downturns, recessions, or unstable financial markets can deter people from saving due to decreased income or fear of financial insecurity.
- Interest Rates: Lower interest rates may discourage saving in banks or other financial instruments, while higher rates might encourage it.
- Inflation: High inflation can erode the purchasing power of savings over time, making certain investment vehicles less attractive.
- Debt Levels: High levels of debt, especially high-interest debt like credit card balances, can significantly hamper the ability to save money.
- Financial Literacy: Understanding financial planning, budgeting, and investment can significantly influence one’s saving habits.
- Social Factors: Cultural attitudes towards money, peer pressure for lifestyle choices, and societal norms can also affect how much people save.
- Taxation: The tax structure, including incentives or penalties for savings and investments, can also be a determining factor.
- Family Situation: Having dependents or caring for family members with special needs can significantly affect one’s ability to save.
By understanding these factors, individuals can better strategize their savings plans and work on improving their financial health.
Final Thoughts
In summary, savings goals can differ vastly depending on your age, lifestyle, and financial obligations. However, understanding the average savings benchmarks for your age group in the UK can serve as a helpful yardstick.
With disciplined saving, informed investment, and a keen eye on reducing unnecessary expenses, you can work towards financial security, irrespective of the life stage you’re in.
Remember, it’s never too early or too late to start saving for a more secure future.
FAQs
Quick ways to increase your savings?
To quickly boost your savings, consider selling unused items on platforms like eBay or Facebook Marketplace for immediate cash. Additionally, review and cut out any non-essential expenses such as unused subscriptions or frequent dining out. Automating your savings right after payday can also help you save without thinking about it.
What should I do with a lump sum?
If you receive a lump sum of money, consider paying off high-interest debt first to improve your financial health. The remaining amount can be invested in a diversified portfolio or put into a high-yield savings account for future needs. Always consult a financial advisor for personalized advice tailored to your financial situation.