Savings are suppose to be put aside for emergencies or for future expenditures, such as a new car, or a deposit on a home. Savings can also be put aside to make retirement easier. However, in new data released it has revealed that no matter the original purpose of the savings for many it has become the supplemental source to getting by.
Schroders Investment Management, Ltd (SIM) released data that the average take from savings to be spent on living costs was 4,600 pounds. That amounts overall to 60 billion pounds.
One reason people may be more willing to raid their savings accounts is because the low interest rates mean the return on deposit is very low. The incentive to leave the funds deposited just isn’t there when weighted against the loss of interest.
People are having a hard time making ends meet. Rising food prices and fuel costs are putting a strain on budgets. The data released by SIM showed 36 per cent of those aged 55 to 64 said they needed to rely on supplemental funds to pay bills.
Jasmine Birtles from moneymagpie said:”I think people in their 50s and 60s are so much healthier and stronger and are living longer.
“I urge them all to have a look at their own earning potential which is much higher than they may realise.
“We’ve seen a lot recently about people in their 50s and 60s being put on the scrap heap, being made redundant, but I say to them to set up your own business and make use of your skills.”
The survey by Schroders also revealed that women were breaking into their savings funds more than men with 34 per cent of women breaking into their savings funds and only 28 per cent of men.
“The amount of capital being drawn down suggests that it is not just rainy-day funds that are being drained, but a significant proportion of individuals’ long-term savings,” said Robin Stoakley of Schroders.
“This is particularly an issue for those nearing or in retirement as they have less opportunity to rebuild their savings and declining annuity income proves insufficient to cover their day to day expenditure.”
Analysts believe the economy has a long road ahead to full recovery. Therefore there are many that are warning that as the savings run out there will be many more in hardship situations than what are today. The savings will run out, retirement savings will have been tapped into, and with an economy in recovery trying to save is difficult so the saving’s balances will have a long journey to recovery as well.