- Over a third (35 per cent) of savers aged 55+ are putting their hard-earned savings into current accounts and not making the most of accounts with more favourable interest rates.
- 31 per cent of respondents aged 55+ said they saved more than usual during the national lockdown (16 March – 04 July).
- Over 55s saved an average of £3,336.04 more during the lockdown period than usual.
LONDON, Wednesday 07 October 2020: Following the UK national lockdown from March – July 2020, Ford Money research reveals over a third (35 per cent) of savers aged 55+ are not making the most of more favourable savings account interest rates, and instead keeping their savings in lower interest current accounts.
This comes as almost a third (31 per cent) of over 55s said they had saved more money than usual as commuting costs, eating and socialising outside of the home were all limited due to national restrictions. This figure rises to 39 per cent of over 75s who have saved more cash than usual. Of those aged 55+ who saved more money, the average amount saved was £3,336.04.
Suzanne Lewsley, chief deposits officer at Ford Money, said, “With high street bank interest rates at almost rock bottom, we’re urging savers to think carefully about where they save their extra cash to make sure it’s growing at the most competitive rates. There are many savers already heeding this advice as our own data reveals there was a 305% increase in the number of new customers in 2020 vs 2019 – but sadly there are still many savers not making the most of better interest rates.
“Since the lockdown period ended, we’ve also observed an increase in the number of people putting money into a shorter one-year term at maturity compared to the same period last year (March – July). This trend is further reflected in our recent research which shows that almost two thirds (62 per cent) of older savers are putting their money into easy access accounts because they want faster access to their money.”
Current saver behaviour trends
As the financial uncertainty looks set to continue, Ford Money’s research reveals that savers are less interested in investing in shares and stocks with just one in 10 (8 per cent) choosing to deposit their money there.
When surveying a group of high net worth individuals, over a third said the most important thing was to not take any risks with their money right now and 33 per cent have put their extra cash in easy access savings accounts.
Ford Money’s own insight supports this trend as the business saw an 18 per cent increase in the number of accounts that hold over £85,000.
Rachel Springall, personal finance expert at Moneyfacts, commented, “Due to prevalent economic uncertainty, consumers appear to be favouring quick access to their money, perhaps more vital than securing the highest possible rate of interest. However, it is important for savers to shop around to acquire a deal that provides not just flexibility, but also a competitive rate.
“If savers have their cash in their current account or even an easy access account with their high street bank, it may not be earning a very good rate of interest. During these times it’s worthwhile for savers to secure a good savings deal to make their money work harder for them.”
Impact on retirement plans
The COVID-19 pandemic has had further long-term impact as the research shows that one in 10 (9 per cent) over 55s now think they will never be able to fully retire and a further 10 per cent said they would delay retirement by 1-5 years. This research coincides with the UK state pension age rising to 66.
Of those whose retirement plans have changed, almost two in five (38 per cent) said that because of the economic uncertainty caused by COVID-19, they would continue to work longer to ensure they had enough money to fund the lifestyle they had envisaged in retirement. This rises to over half of high net worth individuals (53 per cent) who expect to work longer to maintain their lifestyle beyond retirement.
Rachel Springall adds, “There has been significant damage to consumer confidence with a third of over 55s concerned about the impacts that a second wave could have on their finances and their plans to retire. This threat coupled with the state pension age rising this week means many people will be working longer to make sure they’re able to have the retirement they had planned. Now more than ever it’s crucial for us all to consider different options, to become savvier when it comes to saving and ultimately make the most of our hard-earned cash.”
More detailed data and regional trends can be found in the appendix.
Appendix (PDF 143KB)
Ford Money commissioned Censuswide to carry out a survey of 2,018 over 55s and 329 high net worth individuals in the UK. A high net worth individual is defined as someone who has £100,000+ in investable assets. Fieldwork was undertaken from 09 September – 14 September 2020. The survey was carried out online.