Savers leave it late to boost funds for retirement

Savers are leaving it until their mid-50s before they boost their savings reserves – just as they close in on retirement – according to latest research by the Halifax. The average savings balance in the age group 55-64 is £13,516; 46% above the average for all savers in England and Wales at £9,228.

However, savers in the age group below (45 to 54) have an average balance just over half that amount at £7,164: this is also over £2,000 lower than the average balance for all savers. While those in the younger age group of 35 to 44 have an even lower average savings balance of just £3,984.

In contrast, savers aged between 65 and 74 have an average balance of £17,405 rising to £21,648 for savers over 75.

Savers struggle to boost their reserves until their mid-50s

Typically the younger section of the adult population tends to have lower savings, with savers in the age group 25 to 44 having an average balance of between £2,700 and £4,000, a third of the national average for all savers.

This is partly a reflection of a lack of opportunity to save given the shorter period they will have been earning. However, it is more likely indicative of the higher costs of essential spending that many young families face impacting their ability to save. 

Therefore, it is only after reaching their mid-forties that savers start boosting their balances by an average of 89% to £13,516 by the time they reach 64 years of age. (See Table 1)

Richard Fearon, Head of Halifax Savings, comments: “This latest research highlights a stark difference in savings between younger savers and those nearing retirement. Whilst we would expect to see balances grow as people get older, the dramatic rise in the last 10 years before retirement indicates that many savers are leaving it too late to boost their retirement income.

“We know that younger families can find it hard to set aside any spare cash with many outgoings already putting a strain on their finances, but saving regularly, whether it is for a specific short-term goal, or more long-term, should always be a priority.”

Wide regional variation in savings behaviour for all age groups

There is a wide variation in average balances between regions for all savers; the highest overall being in East Anglia (£10,350) and the lowest in the north east (£8,255); a difference of 25%. (See Table 3)

There is also a north-south divide, with savers in the southern regions on average saving 12% more than those in the northern areas (£9,848 versus £8,779).

However, some of the regional disparity is reversed when average balances are compared to average earnings. Savers in London have an average balance equivalent to 26% of annual average earnings, and in the south east this proportion rises to 33%. In contrast, average savings balance is equivalent to 38% of earnings in the East Midlands, Yorkshire and the Humber, and the south west.

Largest average savings balances by local area districts

Highest average balances are held by residents in the Mole Valley1, Surrey (£15,015), South Buckinghamshire (£14,827) and the Chilterns (£14,517). Of the top 30 local authorities with the largest average savings balances, 26 are in the south of England.

Outside southern England, savers in Derbyshire Dales have the highest average balance of £12,664, followed by Fylde (£12,224) and Hambleton in North Yorkshire (£12,218). 

Lowest average savings balances by local area districts

The nation's lowest savers are in London in Newham (£5,215) and Hackney (£5,234).  These London boroughs are followed by Manchester (£5,617), Barking and Dagenham (£5,826) and Lewisham (£5,934).

Eight of the 30 local authorities with the lowest average savings balances are in London.