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The typical household will have £1m of savings by 2041
Guest Author:
Paloma KubiakThe average savings of households in Great Britain is £233,000 but this could rise to £1m by 2041 if asset prices continue to climb at their current pace.
As part of its biannual savings index launched today, the Tax Incentivised Savings Association (TISA) and KPMG revealed that the average savings of households in Great Britain – including property, pensions and financial assets – stands at £233,000.
The gap between the savings of homeowners and non-homeowners is stark – £421,000 compared to £4,000.
TISA said that over the past four years, the movement of prices has “enriched those who own their home, have a pension and/or hold investments.
If the current rate of property, bond and equity appreciation were to continue at the rate seen in the last four years, the typical household will have £1m of savings by 2041, TISA said.
Non-homeowners, who have tended to hold assets in low interest paying deposit accounts, are also vulnerable to a rise in borrowing via credit cards, overdrafts or student loans.
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Geographically, TISA found that the North/Side divide is much less acute for pensions than for house prices. It said pensions go further as wages and the cost of living are lower in “less prosperous regions”.
“The pension pots of those in the South West, Wales and Scotland will pay for a retirement as comfortable as that enjoyed by those in the more prosperous, but more expensive, South East”, the report stated.
Adrian Boulding, director of retirement at TISA, said: “Too many people are not saving enough, or planning for their financial future. The Savings Index is intended to encourage people to save more. Giving people an opportunity to benchmark their savings against their peers is a great way to provide a much-needed nudge as to how much they should be saving. We hope it will help households set long-term goals for themselves, their families and their future financial wellbeing.”
Bill Robinson, senior adviser at KPMG, added: “Rapidly rising house prices and financial markets have boosted the wealth of the affluent. But for those without property, pensions or investments, historically low interest rates have made acquiring wealth a real challenge.”