Faced with a ‘windfall’ sensible Brits would save cash
Brits would battle head over heart if faced with a £15,000 windfall, according to research from J.P. Morgan Asset Management (JPMAM).
When asked what they would do with such a financial gain, people are divided into savers and spenders. Almost half of those surveyed (43%) said they would save the money, a fifth (21%) would invest it, and one in six would pay off a lump sum from their mortgage (16%). However, others would take a different tack, choosing to spend it on a holiday (22%), home improvements (18%), or put the £15,000 towards a new car (11%). The research also found that men would be more likely to invest the windfall than their female counterparts (27% versus 16%).
The JPMAM research also delved into how employment status affects how Brits would spend a windfall. It found those working full time are more likely to use the money to pay off their mortgage (25% compared with a national average of 16%), while those working part time are the most likely to focus on improving their home (20%, compared with 12% among those who are unemployed - who are most likely to save the cash).
Interestingly, the number of Brits who would invest or save a £15,000 windfall has fallen since 2008. More than two-thirds (68%) of UK adults would have saved the £15,000 in 2008, against less than half (43%) in 2012. In 2008, more than a third (36%) would have invested it, compared with just 21% in 2012.
Keith Evins, Head of UK Funds Marketing at J.P. Morgan Asset Management, said: "We are a nation divided on how we would spend a £15,000 windfall, and it's a case of head versus heart - long-term planning versus short-term gratification. It is interesting to delve into how the nation has changed its views over the last five years, as people's personal finances have come firmly under pressure in difficult economic times. It is perhaps not a surprise that these days many of us would spend a windfall on a holiday or home improvements, which we might otherwise have put off because of lack of funds. Those in full-time work are focusing on paying down their mortgages, perhaps because they are worried about how a lack of job security could impact their ability to pay in future, while those out of work are unsurprisingly concerned with putting some cash away to meet unexpected expenses that they would probably have taken in their stride when they were working."
Half of Britons not saving for retirement
Further research from JPMAM revealed that almost half of pre-retirees (46%) admit they currently save nothing for retirement, despite 60% expecting to rely on a state or workplace pension for income. Almost half of respondents (47%) said that they will use state benefits as their expected source of income in retirement (up from 29% in 2006), and almost a third (32%) say they will work part time. Only one in five (20%) expect to use other investments as a source of income in retirement (down from 41% in 2006), while others will rely on inheritance or downsizing their home (16% apiece) and one in 20 (5%) will depend on equity release.
Evins continued: "An unexpected windfall would be a simple solution for many, but wishful thinking isn't going to make up the shortfall for people who are not currently saving for retirement. I'd urge people to think more long-term and start making provision for their financial future. The short-term gratification of booking a holiday is a great feeling, of course, but spending more precious time thinking about longer-term concerns - like investments - will pay dividends in the future."