An average working-age family will be reliant on state benefits and friends and family alone for financial support within two weeks of losing their income, once their savings run out, a report reveals today.
And according Legal & General’s latest Deadline to the Breadline Report, with over 65s included, the overall average deadline is still only 29 days – an increase of three days since the last report in February – from 26 to 29 days.
The improvement is largely because savings buffers have generally increased among 18-24-year-olds since the previous report.
However, rock-bottom interest rates and falling real incomes have meant that households are saving £8.12 less per month on average in 2014 compared with last year.
With 35 per cent of the population not having any money put away, this could potentially see a significant number of people on the breadline, in the event of an unexpected shock to their income.
With a majority of people expecting interest rates to rise by the end of 2015, the report found that a two per cent increase in mortgage interest rates would move the typical household with a mortgage one day closer to the breadline.
Even a one per cent rise would mean households would no longer be able to save each month and would have to change their spending habits, or rely on existing savings, to make ends meet.
Mark Holweger, managing director (intermediated), Legal & General Assurance Society said: “While it’s heartening to see an improvement in the financial situation of UK households, this fourth edition of our Deadline to the Breadline report exposes the harsh reality that many households are on the brink and just weeks away from becoming reliant upon family, friends or the state.”
He added: “With new economic headwinds approaching and an interest rate rise on the horizon, now is not the time to be burying our heads in the sand.”