Almost half (45 percent) of middle-aged people who currently have an above average income would run out of money within six months of losing their main income, according to research by Alliance Trust Savings.
This increases to 67 percent of those with £499 or less available to spend each month. The survey of 1,000 45 to 55 year-olds, with either individual incomes of £35,000 or more a year or household income of at least £60,000 and some level of household savings, showed large numbers would struggle to survive on their savings and investments for much more than three months in the event of losing their main income.
It found that even those with more than £1,000 disposable income per month would struggle to stay afloat long term if they lost their main income, and 35 percent said they would get into financial difficulty after six months.
Additionally, with regard to retirement plans and how respondents expect to fund retirement, 13 percent said they do not know how or when they will be able to afford to stop working and retire, while 67 percent of those with disposable income of £750 to £1,499 are relying on the state pension as part of their retirement planning.
Meanwhile, 33 percent of people with two children expect to work past their state pension age to compensate for saving too little for retirement compared to 26 percent of all respondents, and 23 percent of separated or divorced respondents do not know how or when they will be able to stop working and retire compared to 13 percent of all respondents.
Those within the highest disposable income brackets are most likely to fund their retirement, with private pensions, savings and investments more prominent as disposable income increases.
Head of platform proposition at Alliance Trust Savings, Sara Wilson, commented: “With much of the recent focus on younger generations and those in or at retirement, it can be easy to overlook the scale of the financial challenges facing people in their mid-life years.
“While the late 40s and early 50s can be seen as a time of stability and security, for many it is anything but. From ill health and insecure employment to the demands of children and the effects of separation or divorce, those in their middle years can be vulnerable to a range of financial difficulties and potential shocks.”
She added: “Our research shows that in the mid-life years, managing current financial demands while saving for later in life can often be a tall order. Putting plans in place, keeping a close eye on them and seeking professional advice where necessary is essential in enabling people to get the best out of their finances and take the stress out of the mid-life years.”
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