The number of people taking action to cope with the cost of living increased dramatically between June and September, according to new research from Barnett Waddingham.
In the three months between June and September, the number of people dipping into their savings has increased from 26% to 33% – a 27% rise. This is led by women, at 36%, and people who have retired (37%). With the crisis showing no sign of respite, this begs the question of how long people’s savings will last them, and when they’ll be able to start building a pot back up.
The most dramatic changes include people asking for a pay rise (up from 6% to 9%), and cancelling subscriptions like Netflix and Amazon Prime (up from 19% to 25%). Men are far more likely to ask for a pay rise, at 11% versus 7% of women, as are those aged 18-34 – one in five (20%) plan to ask for a higher salary.
Thankfully, pensions don’t seem to be people’s first port of call when making budget changes – those looking to reduce or stop their pension contributions has slightly dropped from 7% to 6%. However, this still translates to almost a million people having to resort to damaging their long-term financial wellbeing to keep up with rising costs.
Impact of cost of living crisis
| Will you be doing any of the following to keep up with the rising cost of living? | June | September | % Change |
| Dip into my savings | 26% | 33% | 27% |
| Cancel subscriptions (e.g. Netflix, Amazon Prime, Hello Fresh) | 19% | 25% | 31% |
| Pay for more on my credit card | 9% | 9% | -2% |
| Ask for a pay rise | 6% | 9% | 54% |
| Pay for more using ‘buy now pay later’ (e.g. Klarna) | 7% | 8% | 9% |
| Reduce my workplace pension contributions | 7% | 6% | -14% |
| Cash in my investments (e.g. your ISA / stocks and shares) | 6% | 6% | 15% |
| Apply for state benefits | 6% | 7% | 21% |
| Take out a loan from the bank | 3% | 4% | 37% |
| Reduce my private pension contributions | 6% | 6% | 0% |
| Draw down from my pension | 3% | 3% | 0% |
| Other | 3% | 4% | 27% |
| None of the above | 43% | 35% | -18% |
Mark Futcher, Partner & Head of DC at Barnett Waddingham, comments: “It’s completely understandable that people are looking at all of their outgoings to try to make ends meet – and some cohorts of people have undeniably been hit worse than others. The fact that such drastic changes in behaviour have happened in just three months, without even accounting for the chaos in the last week or so, is evidence that things are going from bad to worse.
“For those whose pension contributions are in the firing line, its vital they only cut them as a last resort. Think of a workplace pension as deferred pay; it’s an outgoing now which adds up later. For example, for an average employee contributing £4 now, the taxman gives them about £1 and their employer puts in around £5. That £10 later should only be sacrificed for £4 now if other options have been exhausted.
“For anyone worried, talk to your employer. They’ll be able to give you more information and guidance. The best employers might even help shoulder the financial burden, by upping employer contributions to workplace schemes and even considering continuing to pay employee contributions if you need to pause contributions temporarily. “
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