Britain has a savings deficit of £74bn and more than half of working-age families do not have enough to cover a major hit to their finances, a report has found.
A study by the Resolution Foundation found that 51 percent did not have savings worth three months of income, in case of major problems such as unemployment, illness or relationship breakdown.
They would need to collectively save an extra £74bn to reach that threshold, the think tank calculated.
Around 30 per cent had savings of less than £1,000 set aside for a “rainy day”, 12 per cent revealed they had less than £100 and 5 per cent had no savings at all.
The report found that many people are not saving enough to earn adequate income in retirement.
Deficit: A Resolution Foundation study found that 51 percent did not have savings worth three months of income
He called for an increase in automatic enrollment pension savings and allowing savers to borrow up to £15,000 or 20 per cent of their pension funds to help them cope if they find themselves in difficult circumstances. Currently, you cannot have any until you are 55 years old.
Mubin Haq, chief executive of the Abrdn Financial Fairness Trust, which backed the study, said: “Britain is not a nation of savers.
“Too many have little to turn to, lacking the buffers that prevent a drama from turning into a crisis.”
The findings come despite Britain seeing a surge in savings during the pandemic.
“As previous research shows, most of these improvements were experienced by higher-income households,” the report says.
‘Lower-income households were more likely to see minimal or negative changes in their household finances.
“As a result, despite an aggregate increase in savings during the pandemic, Britain still faces a critical problem of alarmingly low precautionary savings balances.”