Statistically, Brits are not doing too well on the savings front. According to figures from the DWP, around 13 million households (so that’s 48% of all households in the UK) have either no savings, or less than £1,500.
Further statistics from the Money Charity demonstrate that in the second quarter of 2018, households in the UK saved an average of just 4.4% of their post-tax income.
Admittedly, that may be because paying off their debt was their first priority (as it should be). In 2018 the average debt in the UK per adult was £30,819. That’s roughly 113% of average earnings. Indeed, 6 million Brits fear that they will never be debt free.
All these figures, far from sparking a sense of total panic, should in fact serve to illustrate how important it is that you are able to save as much as you can, starting as early as you can. The more time you have to build your wealth, the more of a ‘buffer’ you can build against yourself and disaster.
In order to assist you with this, we’ve outlined below how much you should have saved by certain key ages, and how you’re currently stacking up against ‘the average Joe’.
What you need saved by twenty
This is the very beginning of your savings journey. You have either just entered the workforce, or you may still be at university studying for your degree.
At this age you are not expected to have amassed a great deal of wealth. Instead what is important is that you should be aware of the concept of saving for both a financial safety net and your pension. If you have queries regarding your pension read our Pensions Q&A piece here.
The beauty of compound interest means that the earlier you start to save, the more time your money will have to grow before your retirement. Start by saving a little at a time. Automate your savings starting with what you can afford, and grow it over time.
What you need saved by thirty
Depending on which expert you talk you, you should have saved anywhere between half, and the full amount of your annual salary. (ie. if you earn £30k a year you should have saved between £15k and £30k).
If this doesn’t sound like you and you want to start turning your financial situation around, then read out piece on the 5 ways to fix your finances at thirty for some sound ideas on your next steps.
According to the Office of National Statistics (ONS), currently more than half (53%) of 22- to 29-year-olds have no money saved in a savings account or an ISA.
What you need saved by forty
By the time you reach your forties the average salary is £49,504 according to the ONS. By forty the general rule is that you should have saved three times your annual salary.
If you are concerned then rest assured you’re not alone. A quarter of British adults reportedly have no savings at all. It is never too late to start investing your money in order to grow your wealth over time.
What you need saved by fifty
By fifty you should have saved four times your annual salary.
A report by SunLife in 2017 stated that the average savings among people over the age of 55 is £47,237. Whilst this is double the UK average, it is troubling nonetheless, as leading experts say that you need roughly £260k in order to retire comfortably.
Remember that these numbers serve as a guideline only. If they do not reflect your current financial situation then it’s not a cause for panic. Each individual leads a different life with different financial needs.
What’s important to remember is that you should start saving (ideally between 10% and 15% of your annual income) as soon as possible, and to begin investing these savings into sensible investment options. They key here is time. The longer your investments have to grow, the larger the potential return on your capital.
Your capital is at risk, and past performance may not be a reliable indicator of future results. Oval Money is not permitted to provide financial advice, and if you have any questions please consult an expert.