Britain has a £74billion savings shortfall with more than half of working age families not having enough set aside to cover a major hit to their finances, according to a report.
A study by the Resolution Foundation found that 51 per cent 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 have a combined £74billion extra saved up to meet that threshold, the think-tank calculated.
Some 30 per cent had savings of less than £1,000 put aside for a ‘rainy day’, 12 per cent revealed they had less than £100 and 5 per cent did not have any savings at all.
The report found that many people are not saving enough for an adequate income in retirement.
Shortfall: A study by the Resolution Foundation found that 51 per cent did not have savings worth three months of income
It called for an increase in auto enrolment pension savings and allowing savers to borrow up to £15,000 or 20 per cent from their pension pots to help them cope if they run into difficult circumstances. Currently, none can be drawn down until the age of 55.
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 fall back on, lacking the rainy day buffers that prevent a drama turning into a crisis.’
The findings come despite Britain experiencing a surge in savings during the pandemic.
‘As previous research shows, the majority of these improvements were experienced by higher income households,’ the report said.
‘Lower income households were more likely to see minimal, or negative, changes to their family finances.
‘As a result, despite an aggregate rise in savings during the pandemic, Britain still faces a critical issue of alarmingly low precautionary savings balances.’
