Weekly Round-Up: 8th March 2019

The M Word

FriendsMoney is a bigger taboo than religion or politics, according to new YouGov research commissioned by Lloyds Bank. Half (50%) of UK adults believe that talking about personal money matters is taboo in everyday conversation; higher than sex (42%), religion (26%) or politics (14%).

As a result, the lender is launching The M-word, a campaign to destigmatise talking about money, and partnering with Relate to launch a series of ‘The M-word Courses’ to help people talk about money at key life stages such as getting married, leaving home, or managing your finances for Christmas. The research also found that people don’t talk about money with their loved ones. More than two fifths (44%) of people have avoided discussions about money and a quarter (25%) have lied to family and friends about their personal finances. When conversations do happen, they stir up a range of emotions – almost a third (32%) of people said they find it stressful talking about their finances with family and friends and two fifths (43%) said they had felt embarrassed.

This reluctance to discuss money matters is causing problems in people’s personal relationships with over a third (37%) of people in a relationship have argued with their partner about money and over a fifth (23%) have lied to their partner about money; most commonly, people are lying to conceal the amount of debt they have (11%).

Despite these findings, three fifths (61%) of people said they feel better when they do open up and talk about their money concerns.

Time to plan

working out billsPensioners of tomorrow risk a shortfall of more than £68,000 over the course of their retirement as one in three (33%) middle-aged Brits expect to survive solely on their state pension, new research from Nationwide Building Society shows.

The shortfall would be enough to enjoy a round-the-world cruise for two, buy a new car, build a conservatory and gift the grandchildren a deposit for their first home. Nationwide, which polled more than 1,000 people aged 40 to 60, commissioned the research to better understand the issues people face when it comes to giving up work. The research shows that just four in ten (40%) people in middle age have a private pension in place. It also highlights that more than half (52%) of people aged 40 to 60 are worried about affording retirement, with four in ten (43%) not believing they will be able to afford the lifestyle they want when they finish work.

Those in their middle age expect their monthly shortfall in retirement to reach an average of £208. This equates to £37,440 when taking into consideration the current retirement age and average life expectancy. However, the reality is that their shortfall could be around twice as high, with those polled already in retirement aged 60 and over saying they receive £505 a month in state pension on average but require £885 a month to live on – £616 for essential bills and £269 discretionary spending. For those without an additional pension to take them beyond the basic state allowance, this leaves a shortfall of £380 a month, or £4,560 a year. This means tomorrow’s pensioners may need to tighten their belts and hunker down in retirement – a time they want to be enjoying life and supporting their family. In an average 15-year retirement the shortfall would amount to £68,400, well over twice the average £27,000 annual salary.

The survey shows that those in middle age have an average of £125,350 equity currently in their home but would try and find other ways to survive before tapping into their property wealth. Around a third (32%) see accessing equity in their property as a last resort, while more than a fifth (28%) don’t want to leave any debt to their family. A quarter (24%) wouldn’t know who to approach if they needed advice on their retirement.

Tax free season

Pound CoinsResearch published by Santander this week shows four in ten people are considering a move towards putting money into a Cash ISA during the 2019/2020 tax-year, with rising interest rates cited as the biggest reason. The analysis is encouraging with so many people considering putting their money into ISAs this year and the improved interest rates should give an added boost to people looking for a competitive return on their savings.

However Santander’s research also highlighted a lack of understanding around Cash ISAs, which may mean that many people are missing out on the benefits these accounts offer to savers. Overall almost half of the population (45 per cent) don’t know that Cash ISAs allow them to save money without paying tax on the interest they receive, although more women (58 per cent) understand the tax-free status of their ISA savings than men (52 per cent).

Confusion around the amount of money that could be saved into an ISA is also prevalent, as two thirds (65 per cent) don’t know that they can save up to £20,000 in a single tax-year. Meanwhile, a similar number (64 per cent) believe you must tie your money up for a period of time in an ISA, when ISAs generally do allow access to funds.

Time to cash out?

Credit CardThe Access to Cash Review has published its final recommendations calling on the Government, regulators and banks to act now or risk leaving millions behind. The review concludes that digital payments don’t yet work for everyone and around eight million adults (17% of the population) would struggle to cope in a cashless society.

According to the review, cash is only used for three in every ten transactions, down from six in ten a decade ago and is forecast a fall to as low as one in ten transactions within the next 15 years. This shift away from cash towards digital payments is placing significant strain on the UK’s cash infrastructure which currently costs around £5 billion a year to run. As bank branches and ATMs continue to close, the economics of handling and accepting cash will lead to an increasing number of retailers to go cashless. Given these pressures, the review warns against leaving access to cash to market forces, and urges the government and financial services regulators to take action to ensure cash remains viable for as long as people need it.

The review gathered evidence from more than 120 organisations from across the leisure, retail, financial, charity and business sectors. It also travelled the country, taking evidence from thousands of people including workshops in places including Shetland, Porthmadog and Bournemouth to understand the current needs of consumers and groups across the UK. The review also explored the lessons learned from Sweden and China.

In its interim report ‘Is Britain ready to go cashless’ the review identified approximately eight million people who would be left behind. The panel will meet again in September to discuss the impact of the Review and to assess whether further action is necessary.

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