22m expect their finances to worsen over next three months

• Rising prices have badly dented consumers’ confidence and those in retirement are faring particularly badly 
  
• The proportion of people who expect their finances to deteriorate in the next three months is at its highest since LV= survey began
  
• People continue to spend more and save less as outgoings continue to rise driven by rising inflation

Research from pensions and retirement specialist LV= highlights how 42% (22m) UK adults say they expect their finances to worsen over the next three months. 

The March 2022 figures are the worst they’ve been since June 2020 when the LV= started surveying consumers and highlight how the confidence of UK consumers is falling sharply as millions feel the effects of rising prices.

The LV= Wealth and Wellbeing Monitor* - a quarterly survey of 4,000 UK adults – reveals: 

• Worsening financial outlook: 42% (22m) expect their finances to worsen over the next three months
• Deterioration in finances over past three months: 44% (23m) say their finances have deteriorated over the past three months 
• Outgoings increase: 58% (31m) say their total monthly outgoings have increased in the last three months 
• Saving falls: 23% (12m) said the amount they are saving has fallen in the last three months

Those in retirement are faring particularly badly:

• 65% say their supermarket spend has increased in the last three months
• 65% say their total monthly outgoings have increased in the last three months
• 46% expect their finances to worsen over next three months

Clive Bolton, Managing Director of Protection, Savings & Retirement, said: 

“The results of the latest LV= Wealth and Wellbeing Monitor highlight how the finances of millions of people are being squeezed by the large rise in the cost of living. The indices for savings, financial outlook and outgoings are the worst recorded since we started surveying consumers two years ago." 

“Consumer sentiment had been steadily improving between spring and early autumn 2021 as the success of the vaccine programme, fall in death rates and easing of lockdown restrictions allowed life to begin to return to normal. However, the sharp rise in the cost of living has caused confidence to fall dramatically."

“Rising energy prices are becoming a significant problem for many people, particularly those who are retired. Rising prices coupled with poor returns on deposit accounts will dismay pensioners whose only or main source of retirement income is the State Pension."

 “Rising inflation and poor returns from cash present a dilemma for people in retirement. They might have to drawdown their savings more quickly than they would want or switch some of their savings into higher-risk assets. These can offer the prospect of keeping pace with inflation but can be hit hard if investment markets fall."

“As always with retirement planning, consulting a financial adviser about your retirement plans is a good way to understand your retirement options, and how you might ensure your retirement income keeps pace with inflation.”  

The LV= Wealth and Wellbeing Indices:

LV= uses indices to track overall changes to spending, saving and finances. The indices are calculated by: subtracting the % who stated a negative change over the past three months (e.g. decrease/ worse) from the % who stated a positive change over the past three months (e.g. increase/ better), to work out the overall impact.

The above data shows that there have been significant changes to some indices between December 2021 and March 2022.

• Finances over past three months: The index measuring people’s finances over the past three months was -34 in March 2022. More people say their finances have got worse over the past three months compared to Dec 2021 when the index was -20. The figure is the lowest recorded since the Monitor started in June 2020. 
• Financial outlook: The index measuring financial outlook for the next three months was down sharply at -31 in March 2022 compared to -12 in Dec 2021. A negative index means more people think their finance will worsen over the next three months compared to those who think it will improve. The figure is the lowest recorded since the Monitor started in June 2020. 
• Income and outgoings: The index measuring income fell to 5 while the index measuring outgoings also hit an all-time high of 49 with a lot more people (58%) saying their outgoings have increased compared to decreased (9%).
• Savings index: Savings sentiment has also deteriorated. The index measuring saving has fallen to -6 in March 2022 from -3 in Dec 2021, indicating that people are spending more and saving less. 
• Spending on socialising and at the supermarket: The index measuring spend at the supermarket has increased to 46 in March 2022, the highest figure since the Monitor began. A far greater proportion of people (56% 29m) say their supermarket spend has increased compared to those who say it has decreased (10% 5m).

Notes to Editors

* LV= surveyed 4,000 nationally representative UK adults (of which at least 500 were mass affluent) via an online omnibus conducted by Opinium in March 2022.