How Rising Living Costs Are Impacting Britons' Savings and Pensions
Unauthorized Lifetime ISA withdrawals rose by 139% between 2020/21 and 2023/24, highlighting financial strain on many UK savers. According to Finder, the average savings in the UK in 2025 stands at £16,067, yet 39% of Britons have £1,000 or less, and 23% have £200 or less in savings. Notably, 16% of UK adults have no savings at all, with this figure rising to 18% among millennials and Gen X.
The personal savings rate peaked during the first lockdown in 2020, but persistent high living costs have since forced many to dip into their savings. Factors such as rent or mortgage payments, childcare expenses, and student loan repayments have contributed to increased financial pressures. As a result, many individuals are pausing pension contributions and emergency savings efforts.
Several personal cases illustrate these challenges. Andrew from Essex has about £4,000 in savings, £4,000 in stocks, and monthly outgoings of £2,800. While he has £30,000 accumulated in a workplace pension, his saving has currently paused. Ryan from Glasgow has zero savings and experiences periods of food insecurity when finances are tight, reflecting the 16% of the population with no savings.
Carrie from Manchester has £70,000 in her pension but lacks emergency savings; her illness and rental costs threaten her retirement prospects. Jon from Shropshire holds around £15,000 in an ISA, a £250,000 pension, and a £2,000 emergency fund, saving about £400 monthly, but he may struggle if overtime hours decrease or interest rates rise. Neal from North Yorkshire has £6,000 in savings and a £135,000 workplace pension but faces financial anxiety due to uncertain monthly pay as he plans for his first child.
These examples underscore the broader trend of Britons grappling with saving and pension challenges amid the rising cost of living, affecting their financial security and long-term retirement planning.
