Millions of midlifers are propping up their families

Impact on work, wealth and wellbeing putting further pressure on age group.

The financial decisions made by individuals as they reach retirement could have significant consequences on their finances and standards of living. Midlifers (people aged 40 to 60) are facing a challenging backdrop, with rising inflation and increasing energy bills putting further pressure on an age group that is already juggling multiple headwinds.

Midlifers spend £10 billion a year in financial help for loved ones, while support costs have risen by £300 annually over the last 15 years. According to new analysis[1], responsibility peaks at the age of 45, with midlifers having the greatest level of financial responsibility at this stage of their life.

Greater pressure

Unpaid caring responsibility also becomes more common from the age of 58, meaning many 40-60-year-olds are struggling to juggle their responsibilities.

Many midlifers already feel the level of support they provide is unsustainable (10%). With inflation set to continue to rise throughout 2022, energy prices reaching record highs and an increase to National Insurance, this support will be under even greater pressure[2].

Financial support

The study examined the unique challenges faced by those in midlife and the impact of these on people’s work, wealth and wellbeing. It finds that millions of midlifers are propping up their families, with more than six million people aged 40 to 60 (33%) currently providing financial support or unpaid care to at least one loved one, on top of their job and other family commitments.

More than one in six (17%) people in midlife provide financial support to an adult in their life, such as an elderly parent or grown-up child, at a collective cost of £10.4 billion a year. Those supporting adult children will spend an average of £247 a month, whereas midlifers who provide financial support to an elderly parent or relative will spend an average of £282 a month, in addition to their own household expenses.

Time pressures

Alongside financial support, those aged 40 to 60 are also relied on to provide unpaid care (15%) to elderly relatives or childcare for grandchildren while also juggling their lives and careers. The average amount of time taken up by unpaid care is the equivalent to a part-time job, at nearly 15 hours a week.

As a result of these time pressures, one in four people in midlife (25%) get less than an hour to themselves in the average day and one in five (19%) spend no time on their financial wellbeing.

Midlife spending

The financial and caring commitments required of people in midlife have already increased in recent years. Based on analysis of ONS data, spending in areas that includes support for other generations has increased by £300 in the last 15 years, placing further pressure on this age group[3].

The COVID-19 pandemic has increased this further, with those in midlife spending more time and money supporting their loved ones. Just over half (52%) of 40-60-year-olds in the UK have seen their financial pressures grow, while 34% say that it has increased the time pressure they face.

Source data:
[1] Opinium survey of 4,009 UK adults aged between 40 and 60 years old in the UK was conducted between 28 December and 6 January 2021
[2] Rising cost of living in the UK, House of Commons library
[3] Opinium analysed data from the ONS to look at the most relevant spending amongst households where the household reference person is closest to our midlife cohort (in this case 50-64). The trends from the ONS Family Spending series indicates that spending on areas such as health and education, which are some of the main areas of spend for those providing care or financial support, is approximately £300 higher than it was for households where the household reference person is a midlifer compared to 15 years ago.

How to cope with the rising cost of living

Nine in ten adults make stark spending decisions as anxiety runs high.

The pressure of spiralling living costs is a major concern among many UK households, with the vast majority looking to make significant lifestyle changes in response to price rises.

According to new research[1], 95% of adults in the UK say they are worried about the anticipated rise in the cost of living in 2022. Women are the most worried, with a third (33%) mentioning they are extremely worried compared to a fifth (22%) of men.

Cost of living increases

The expense most UK households are concerned about is the rise in energy bills (92%), with three in ten (29%) being extremely worried about this, followed by food shopping (87%). Cost hikes to phone and internet contracts, which typically increase by the more than the Consumer Price Index (CPI) rate, concerns 84% of UK adults.

The level and speed of price rises means nine out of ten of us (89%) are looking to make changes to pay for the cost of living increases. Worryingly, the option for a fifth (21%) of people is to borrow their way out of trouble, with 7% admitting they simply don’t know how they’ll cover increases and 5% of workers saying they are considering taking out a short-term (payday) loan.

Cut back on costs

Two-thirds (66%) of people say they will change their food shopping habits, with half of these saying they’ll reduce the amount of food they buy. Other solutions to cut back on costs include reaching for the thermostat and reducing the length of time the central heating is on (46%), turning off the heating in unoccupied rooms (36%) and nearly a fifth (17%) taking the drastic action of turning the heating off altogether. As part of the cutting-back regime, half (48%) of fulltime workers feel they’ll be forced to reduce or stop saving altogether.

On top of rising costs, National Insurance contribution rates increased from April, just as energy bills rise more steeply, which will dramatically affect take-home pay. For an individual on a salary of £50,000, that will mean an extra deduction of £464 a year, or £214 for someone earning £30,000. Worryingly, a fifth of workers (20%) say they are not aware of these changes, and two-fifths (43%) say whilst they are aware, they are not prepared for the changes to start.

Anxious about finances

Just as families in the UK felt they’d seen the worst of the financial impact of COVID, they’re facing a dramatic rise in their household bills. People are having to make difficult choices in an attempt to reduce the impact of rising energy bills, higher inflation, tax hikes and potential interest rate increases. Understandably, this has made many people anxious about their finances, but it’s also testing their financial resilience.

Household bills are rising steeply, with the cost of filling up the car at the pumps having reached eye-watering levels, leaving families up and down the country worried about their ability to make ends meet. Concern is so widespread that families who, on the face of it, would be considered financially comfortable and even those with six-figure incomes are deeply worried.

10 ways to help manage your finances:

1. Save money on your energy bills

If you’re finding it hard to pay your energy bills, contact your provider as they should help you with ways to pay and don’t be afraid to ask for help from a debt advice charity if you’re struggling.

Switching your energy supplier used to be a good way of saving money on your household bills, but with energy prices soaring, you’re probably better off staying on the standard tariff with your existing supplier once your fixed tariff comes to an end. Some suppliers aren’t taking on new customers, and that way you’re protected by the energy price cap. The government-backed website – Simple Energy Advice – has tips on how to keep your energy bills down.

2. Save money on petrol

Try using a fuel price checker site to check that you’re always getting your fuel for the cheapest price possible. Other ways to save include: driving at a lower speed and avoiding accelerating and braking quickly if you can; making sure your tyres are at the right pressure; and taking out anything heavy in the car that you don’t need to carry.

3. Food bills

Grocery bills can make up a big proportion of your household spending so it makes sense to look for savings. Plan your meals for a week and then write your shopping list – this will help you avoid buying unnecessary items. Consider changing to a cheaper supermarket or to different brands if you prefer a particular supermarket.

4. Water bills

You can’t switch water suppliers but there are steps you can take to keep your bills down. Check if you’d save money by switching to a water meter. You can use the Consumer Council for Water’s calculator. If you’re on certain benefits and have a large family or someone with a particular medical condition, you may qualify for the WaterSure scheme, which caps water bills. Meanwhile, if you’re on a low income or receiving benefits, check what additional assistance your water company offers.

5. Council Tax

Depending on your circumstances and who is living with you, you may qualify for a Council Tax discount. For example, you can get a 25% discount if you’re the only adult living in the property. Find out what discounts are offered by your local council at GOV.UK.

If you’re on a low income or certain benefits you may be able to get a Council Tax Reduction. Your bill could be reduced by up to 100%. There’s a different scheme in Northern Ireland.

6. Check if you’re entitled to state benefits

Billions of pounds of state benefits go unclaimed each year, and you could be missing out. The national charity Turn2us has a free and confidential benefits calculator on its website (https://benefits-calculator.turn2us.org.uk/), which can help you work out which means-tested benefits you’re entitled to. It also has a grant search tool (https://grants-search.turn2us.org.uk/) for information on grants you may be able to apply for.

7. Find out where your money’s going

Start by finding out where your money’s being spent. It sounds obvious, but we may not realise exactly how much we’re spending each month – and what we’re spending it on – until it’s laid out in front of us.

Review your last three bank statements and credit card bills (or check online) and spend some time going through them, highlighting any areas where you think you’re spending money unnecessarily or spending too much. This could be on anything from a top of the range broadband package that you don’t need, to a mobile phone contract where you’re paying for data you don’t use.

Every month money is wasted on unused subscriptions, with the most common wasted money on gym memberships. A fifth (19%) of UK adults said they planned on cancelling TV subscriptions (e.g. Netflix, Amazon Prime). Even magazine subscriptions of a few pounds a month are money down the drain if you don’t have time to read the magazine. Take a few minutes and cancel any subscriptions you don’t really use to save yourself a bit of cash.

8. Draw up a budget

Drawing up a weekly or monthly budget will help you get your finances under control. It’s just a list of money you have coming in and what you spend and it doesn’t have to take long to set up. There are plenty of templates online to get you started. Alternatively, budgeting apps can also be used to plan what you want to spend and keep track of it.

9. See if you can pay less interest

If you owe money on an expensive credit card, it may be worth considering whether you can transfer the balance to a credit card charging 0% interest. Although these cards are interest free, you will normally be charged a balance transfer fee of between 1 and 3% of the amount you transfer. Because you won’t be charged interest on your balance, more of your money can go to repay what you owe.

These cards aren’t right for everyone, and it’s important to make sure you can pay off your balance by the time the 0% interest deal runs out. It may also affect your credit score, especially if you do it multiple times.

10. Get help with unmanageable debts

If you are struggling to pay for the essentials, you are using one credit card to pay off another or your debts are causing you worry, then contact a debt advice charity, such as StepChange. They will be able to give you help with your debts, free of charge.

Source data:
[1] Royal London commissioned a survey by Opinium between 25 February and 1 March 2022 with a sample of 4,001 nationally representative UK adults.

Disrupting social plans leads to savings surge

Britons saved almost £4bn as a result of the Omicron variant.

New research[1] has highlighted Britons saved almost £4bn[2] as a result of the Omicron variant disrupting social plans during the festive period.

The identification of the new variant and the subsequent surge in positive cases caused many to put festive plans on hold this year, resulting in 35% of people saving money, with an average saving of £212 per person. 1% of people cancelled bigger plans over Christmas, resulting in savings of over £1,000. Overall UK adults saw total savings amount to approximately £4bn.

Variant’s emergence

The data also revealed that those aged between 25 and 34 saw the biggest savings, with 41% saying they had saved money on socialising during the festive period following the Omicron variant’s emergence. Previous research[3] in 2020 found that 18 to 30-year-olds were the most likely to be saving more money as a result of the pandemic, with almost 48% saying they had put more money aside following the first lockdown.

With the cost of living impact becoming ever more prevalent as we move through 2022, many will no doubt be thankful to have saved a few extra pounds from the festive season. Being in control of your finances enables you to manage them more effectively, and eliminates the pressure of worrying about money as you have the sense of security that comes with knowing how much you have available to spend.

Financial difficulties

There will always be times throughout the year when expenditure will vary, so having well managed finances will allow you to be prepared, regardless of what changes may happen along the way. If you have money set aside for emergencies, you’re far less likely to experience financial difficulties or have to borrow at a high interest rate if things go wrong or your circumstances change. Knowing you’ve got some money tucked away might help you sleep better at night too.

Saving regularly is a good way to build up an emergency fund. You’ll find that if you get into the habit of saving each month your savings will soon mount up. There isn’t a one-size-fits-all approach to emergency savings because everyone’s expenses, income and priorities are different. Your end goal ideally should be to set aside between three to six months of your expenses.

Source data:
[1] YouGov research conducted for Quilter. Total sample size was 2069 adults. Fieldwork was undertaken online between 23rd – 25th December 2021. The figures have been weighted and are representative of all UK adults
[2] YouGov research conducted for Quilter. Total sample size was 2069 adults. Fieldwork was undertaken online between 23rd – 25th December 2021. The figures have been weighted and are representative of all UK adults. Total savings calculated by Quilter using median savings figure. Total UK adult population calculated by Quilter using ONS estimated population data Estimates of the population for the UK, England and Wales, Scotland and Northern Ireland – Office for National Statistics (ons.gov.uk).
[3] Survey conducted by Toluna on behalf of Quilter between 27-30 April 2020 with 1014 UK adults

“Time is money”

Five principles of investing everyone should know.

Are your investments working as hard as they could be? With so many options out there, it can be confusing. We can help you navigate your options and provide a personalised recommendation based on your investment goals.

The following five principles will help you get on top of some key issues that affect everyone who invests their money.

1. Set investment goals

Successful investing begins by setting measurable and attainable investment goals and developing a plan for reaching those goals. Keeping your plan on track also means evaluating the progress on a regular, ongoing basis.

Whatever your personal investment goals may be, it is important to consider your time horizon at the outset, as this will impact the type of investments you should consider to help achieve your goals.

Committing to investment goals will put you on the path to building further wealth. Investors who make the effort to plan for the future are more likely to take the steps necessary to achieve their financial goals.

2. Invest as soon as possible

It’s easy to say that it is better to invest early, but why? The benefits of investing early are numerous and should not be overlooked. However, the benefits that come with starting your investment portfolio as soon as possible will also depend on your attitude towards investment risk and how patient you can be. It is no secret that the well-known proverb ‘time is money’ could not ring more true in today’s society.

You might be inclined to ask yourself the following questions: ‘Why bother investing early?’ ‘What difference does it make?’ And ‘Why should I invest now instead of next year or beyond?’ The answer is that time allows you to take more calculated risks.

If you invest early and incur a loss, you have more time to make up for the loss on investment. Whereas an investor who starts investing at a later stage in life will get less time to recover any losses. Thus, with early investments, your investment has the opportunity of more time to grow in value.

Not only is time your best friend when you’re investing, but you’ll also reap the benefits of something called ‘compounding’. To paraphrase Ben Franklin: Your money makes money. And then you make more money on the money your money makes. The longer your money can benefit from the power of compounding, the bigger your gains will be as time goes on.

3. Invest regular amounts

By investing regularly, you benefit from highs and lows in the market – called ‘pound cost averaging’ – and this helps cut down the risk of investing when the market is high. Dips in the market, particularly in the early years, could even work to your advantage provided you have committed to investing for a lengthy period.

If your chosen investments have become cheaper to accumulate it means your investment buys more shares or units to keep for the long term. By investing regular monthly amounts, rather than a larger lump sum in one go, you end up buying more shares or units when prices become cheaper and fewer when they become more expensive.

Although it might sound quite technical, it essentially means adding money on a regular basis into your investment. This is an effective way to invest because if you keep buying when the market falls you could, over time, turn volatility to your advantage.

4. Diversify your portfolio

Diversification is spreading investment risk, the goal being to increase your odds of investment success. Your investment portfolio risk tolerance should be split across different types of investment, so your money is less likely to be affected by any single event or economic development.
A simple example might be splitting £10,000 between shares in FTSE100 companies and shares in small companies, government bonds and corporate bonds. Diversification is important in investing because markets can be volatile and unpredictable. While individual asset classes can suffer declines, it’s very rare that any two or three assets with very different sources of risk and return, like government bonds, gold and equities, would experience declines of this magnitude at the same time.

Where possible, always make investment decisions and portfolio allocations based on your personal circumstances and goals. Accordingly, asset allocations in a portfolio should not only be guided by your risk tolerance and its ability to guard against market volatility, but also by the stage of life you are at.

5: Resist the urge to panic sell

What this means is that your ability to cope with short-term volatility in your investments is just as important as the choices you make at the outset of your investment journey. But if, say, there is a stock market correction, resist the urge to sell up immediately; instead sit tight and ride out any downward movement before looking for opportunities to exploit if they arise later.

The fear of incurring major losses could make it extremely tempting to sell your investments. Yet while this may temporarily alleviate your nerves, doing so could put a significant dent in your long-term gains. Investment trends show that leaving your money invested increases the chances of it growing and building your wealth pot.

If you invest for the long term, any short-term volatility shouldn’t affect your ability to reach your investments goals over time. Keep calm and carry on building up your investments. History has shown that over long enough time periods, no matter what challenges the global economy has faced, markets recover from significant downturns.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

Invest your way out of inflation

Why now is the time to make sure you protect your wealth.

The word ‘inflation’ had barely featured in the market’s vocabulary in the last three decades until it suddenly started to come back with a vengeance in 2021. As higher inflation looks set to persist in 2022, finding ways to generate a return on investments greater than inflation will be a key investment theme – otherwise your wealth falls in real terms.

Spending spree

There are two basic reasons why inflation has been increasing: supply and demand. Starting with the latter, consumers have been on a spending spree after having spent a large proportion of time during 2020 and 2021 at home bingeing on Netflix.

The main reason for the current rise is due to the global price of energy. This has meant higher energy and transport bills for businesses, many of whom pass on the extra costs to their customers. Supply problems and higher shipping costs are also continuing to have an impact on businesses.

Healthy economy

Central banks kept saying that inflation was ‘transitory’, but this now seems to have been replaced by the word ‘persistent’. The result is that inflation will remain high on the economic agenda in 2022.

Inflation is a measure of how much prices have gone up over time. It’s the rate at which cash becomes less valuable – £1 this year will get you further than £1 next year. It tends to be a good sign in a healthy economy, but too much of it can be hard to reel in and control.

BoE forecast

The Bank of England (BoE)[1] expects inflation to reach over 7% by spring 2022 and then start to come down after that. That’s because most of the causes of the current high rate of inflation won’t last. It’s unlikely that the prices of energy and imported goods will continue to rise as rapidly as they have done recently. And this means that inflation will eventually decline.

The BoE forecasts the rate to be much closer to their 2% target in two years’ time. But even though the rate of inflation will slow down, the prices of some things may stay at a high level compared with the past.

Purchasing power

Beating inflation means earning higher returns from an investment than the inflation rate in the economy. If your return on investment is less than the inflation rate, this could basically nullify the returns you have earned. Due to various reasons, the purchasing power of money decreases significantly every year.

Investing with inflation in mind is essential for protecting your current and future wealth and involves choosing assets that naturally keep pace with rising prices. These mostly include either real, tangible assets, or investments that pay a variable rate and appreciate or increase over time.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

Source data:
[1] https://www.bankofengland.co.uk/knowledgebank/will-inflation-in-the-uk-keep-rising