‘Many middle-aged people would run out of cash within months if they stopped working’

Sara Wilson of Alliance Trust Savings
Sara Wilson of Alliance Trust Savings
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It’s supposed to be a period of stability, but many middle aged people fear they would face a financial crisis if they lost their job.

Research by Alliance Trust Savings found that almost half (45 per cent) of middle-aged people who currently have an above average income would run out of money within six months of losing their main income.

This rises to two thirds (67 per cent) of those with £499 or less available to spend each month, highlighting the fragility of mid-life finances.

The nationwide 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, was carried out to shed more light on the challenges faced by people in middle-age.

It revealed that large numbers would struggle to survive on their savings and investments for much more than three months in the event of losing their main source of income.

The survey also asked whether respondents had a retirement plan in place and how they were most likely to fund retirement:

Although one in three people have clear goals for how and when they’ll retire and financial plans in place, 13 per cent said they don’t know how or when they’ll be able to afford to stop working and retire.

Almost two thirds of people are relying on the state pension as part of their retirement planning, including 67 per cent of those with disposable income of £750 to £1,499 a month.

Sara Wilson, Head of Platform Proposition at Alliance Trust Savings, said: “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.

“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.”