Have we lost the savings habit?

Scottish Widows have suggested that the financial industry work with the government to encourage long-term savings and make the public more aware of finance and investments. A spokesperson said that the report illustrates that attitudes towards saving need to be changed and we need to promote awareness and urge people in the UK to save.

The group are anxious that nearly 40% of people in the UK do not have a nest egg for the near future. The research found that 15% of people are only saving 5% or less of their earnings and nearly 40% of parents with grown-up children are shelling out £12,000 from their savings to help their children.

Previous research by National Savings and Investments (NS&I) in 2010, found that most people didn’t get serious about putting money aside into a savings account until they reached age 25. It also found that more than a fifth (22%) of UK consumers didn’t start setting aside money until after their 30th birthday, while a further 13% failed to start saving until they hit 40, with nearly one in seven (15%) confessing to never saving anything.

In 2009, in research for its fifth annual UK Pensions Report, Scottish Widows found that one in five (22%) of women over 50 were saving nothing towards their pension, up from 14% in the year previously – representing an increase of 57%. The over 50s were found to be the most likely to have cut their savings since 2008, with 21% having done so. More than a third (35%) of those over 55 said the economic downturn has affected their retirement savings. Scottish Widows also said the figures suggested that women over 50 had ‘given up on pensions savings altogether’.

The broad challenge is how to encourage and enable people to ‘get and keep the savings habit’, when clearly affordability has become a bigger issue for many of us. The evidence is growing that not only are many of us not saving for the future, but that we are also tapping into any existing savings simply to survive in the present. Can we now re-grow the savings habit and save ourselves, or has the arrival of automatic enrolment into pension schemes become inevitable as the only way to force change and make us save for the future?