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Funding life goals can top £1m

Cherry Reynard
Written By:
Cherry Reynard
Posted:
Updated:
05/12/2014

The average cost of funding typical life goals including getting married, buying a home, having children and retirement is £877,000, finds the Lloyds Bank Family Savings report.

However, the overall figure masks significant differences across the UK. Londoners face an average cost of close to £1.2 million compared to a leaner £702,000 in the North East.

The cost of retirement is by far the greatest cost. Getting married costs a relatively undemanding £11,168 for UK couples, while a joint retirement fund required to maintain an average couple’s standard of living is close to £685,000. The cost of buying a house is another significant drain on resources with the average three bedroom semi-detached house in the UK now £175,000.

Those who start saving early in life hugely increase their chances of reaching outright home ownership in later life. The average married couple has to borrow exactly 50% of the total money used to fund their own share of wedding costs. Only 9% of people marrying had to borrow all of the money they spent on their wedding, while 43% managed to fund their wedding entirely from savings. The average first time parent has to borrow only 9% of first-year baby costs, while almost three-quarters (73%) manage to avoid ‘baby-borrowing’ altogether.

When it comes to purchasing a house, very few people are lucky enough to be able to avoid borrowing. Recent Council of Mortgage Lenders data suggests that the average first-time-buyer puts down a 20% deposit.

The report reveals that those who start saving early in life are 50% to 57% more likely to own a property and investments in their forties and fifties. For example, among those 45-64 year-olds who started saving seriously before age 25, 55% now own their home outright. In contrast, of those who only started saving seriously at age 34 or later, 35% owned their home outright. The theme continues with non-cash investments, such as shares. 60% who started saving seriously before age 25 owned non-cash investments, compared to just 40% of those who didn’t start saving until 34 or later.

Philip Robinson, Savings Director at Lloyds Bank, said: “The average cost of meeting our lifetime goals is almost a million pounds, which is a daunting figure for anyone. However, the report clearly shows that by getting into the saving habit early you can significantly improve your financial health later in life”.