Home Business NewsBusinessOver 30 million Brits feeling the strain as cost of living surges

Over 30 million Brits feeling the strain as cost of living surges

by LLB Reporter
21st Oct 22 11:50 am

The FCA has revealed an alarming rise in financial vulnerability in the UK as the cost-of-living crisis hits UK households:

  • 31.9 million people (60% of all UK adults) across the UK are finding itย aย heavy burden or somewhat ofย aย burden to keep up with their bills, an increase of around 6 million people since 2020
  • There has been an increase in people in financial difficulty, with 4.2 million people missing domestic bills or credit repayments in 3 or more of the last 6 months, up from 3.8 million in 2020
  • 12.9 million UK adults now have low financial resilience โ€“ 1 in 4 (24%) of all UK adults โ€“ and up more than 2 million on 2020 (10.7m). These are people who are in financial difficulty, or who could quickly find themselves in difficulty if they sufferย aย financial shock

Tom Selby, head of retirement policy at AJ Bell, comments:ย โ€œWith inflation atย aย 40-year high and energy costs surging, it is no surprise that millions of people are struggling to keep up with their bills. However, seeing the raw figures in black and white is sobering.

โ€œAย staggering 31.9 million people โ€“ 60% of all UK adults โ€“ say they are finding itย aย burden to keep up with the cost of living,ย aย 6 million rise in the last two years. Worryingly, almost 13 million people – one in four adults โ€“ are deemed to have low financial resilience. That figure is up by more than 2 million since 2020.

โ€œThis is reflected inย aย substantial rise in the number of people in financial difficulty, with 4.2 million missing bills or credit card payments 3 or more times in the of the last six months, up from 3.8 million in 2020.

โ€œThose living in the most deprived areas of the country are depressingly, but unsurprisingly, suffering badly. They are seven times more likely to be in financial strife than those in the least deprived areas of the country.

โ€œThis brutal inequality was the driving force behind the โ€˜levelling upโ€™ agenda pushed so hard by former Prime Minister Boris Johnson but essentially abandoned by his successor Liz Truss.

โ€œSadly, things are likely to get worse before they get better, with millions of people facing rising mortgage costs year as interest rates spiral.โ€

Think carefully before accessing your pension

โ€œWith so many people struggling to pay their bills, there will inevitably beย aย temptation for those aged 55 and over to raid their pension to help make ends meet.

โ€œThe latest FCA data suggests the number of retirement pots accessed for the first time rose 18% in 2021/22. The total cash withdrawn from pensions also rose 22% to over ยฃ45 billion.

โ€œAnyone accessing their pension earlier than planned, or taking bigger withdrawals to cover higher living costs, needs to think carefully about the impact this will have on the sustainability of their retirement income plan. Taking taxable income from your pot will also trigger the โ€˜money purchase annual allowanceโ€™, severely restricting the amount you can contribute to your pension each year.

โ€œWhile in some cases savers may feel dipping into their pension is the only option, itโ€™s important to take the time to consider how decisions taken today will impact on your finances further down the line.โ€

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