Savings squeeze on mid-life parents

Piggy bank smashed with hammerMiddle aged high earners have borne the brunt of shrinking savings pots, a report from ING Direct has found.

People aged between 35 and 54 who are earning £47,000 and above have seen their savings fall by 35% in the third quarter of this year, from £5,570 the previous quarter to £3,621.
This drop was three times faster than the general fall over the quarter, ING Direct's Consumer Savings Monitor said.

Savings overall went down by 11% over the third quarter of this year, taking the typical savings pot for someone on a median average income of £15,791 to £1,501 - equivalent to just 35 days take home pay. This was the lowest level of cash readily available in banks and building societies since ING Direct began tracking savings in January 2009.

Rising prices were found to be the primary reason for the draw down, as mid-lifers - especially those with children - struggle to meet living costs such as groceries, utilities and childcare. Holiday costs have also put finances under pressure, as well as rising unemployment.

The report suggested that those aged 35 to 54 in the higher income bracket have been disproportionately affected due to their higher fixed outgoings such as mortgages, fuel, and utility bills, meaning they have been hit harder by price rises.

ING Direct chief executive Richard Doe said: "Younger and lower earning savers have fewer reserves, making them the most vulnerable - especially with unemployment rates at a 17-year high. But the figures tell us that proportionally, it is mid-life parents who are losing out to the greatest degree."

The biggest "winners" were the over 55s, the report found. Those in this age group have been able to increase their savings from £3,995 in the second quarter of this year to £4,549 and were the only demographic found to be significantly better off.

Reliance on borrowing has grown across the UK population. Levels of unsecured debts such as credit card bills went up, from £2,513 in the second quarter of this year to £2,629.

But rather than people adding to their existing balances, the rise has been driven by new people taking on debt. The proportion of people relying on credit rose from 41% in the second quarter of this year to 45%.
© 2011 Press Association
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