What is Your Deadline to Breadline?
Published / Last Updated on 07/10/2022
Legal and General has recently published its 2022 “Deadline to Breadline” report. The report focuses on the financial resilience of households in the UK and was last seen in 2020.
Legal & General's Deadline to Breadline Report
Fundamentally, we are still overestimating are own financial resilience, we are underinsuring, underestimating the need to save but deep down have long term concerns about our financial wellbeing but are not taking action to deal with our shortfalls.
Emergency Savings
On average, people estimate they would survive financially for 60 days with no income. Looking at the number, L&G suggest most people would only survive 19 days (down from 24 days in 2020).
- Action: We all need to save more. We need to have income protection insurance.
Excess Income Over Expenditure
2 million people have no money left at the end of the month. That’s an increase in 2 years of 330,000. We put this down to inflation and cost of living increases.
The average home has £700 excess income over basic living expenses at the end of the month. This gives some room for savings and leisure. East Anglia has the greatest excess followed by London/South East and Yorkshire/Humberside. London has high incomes; Humberside has a much lower cost of living.
- Action: Look at your bank statement and itemise every monthly expense as either an ‘essential’ expense or ‘leisure’ expense. We can all cut back or change leisure ‘fun money’ expenses.
Savings In General
60% of households have less than £5,000 in savings.
16% of households have zero savings.
67% prefer to save for the unexpected whilst 33% prefer to insure for the unexpected.
- Action: We are clearly not saving so we need to have more insurance. Income protection insurance, life insurance and critical illness insurance. Only 8%, that’s 1 in 12 people have some form of income protection/sickness insurance.
Retirement
22% of people are confident in their retirement savings meaning 78% are not.
17 million people, that’s 54% of all workers, are not saving anything in a pension.
- Action: It’s time to ‘wake up and smell the coffee’. Stop buying the latest car, the latest smartphone Max-Pro-Trash or Fold-Screen-Gimmick, stop paying for subscriptions TV, cut back on takeaways and buy a ‘takeaway in a bag’ from the supermarket. Make sure 10% or at the bare minimum 5% of your wages are saved in a pension. If you wish to retire in poverty, keep getting the latest smartphone, that will worthless and not supported in 3 years and retire in poverty.
