More than 1 in 4 struggling to cope with higher cost of living

Many still struggling despite rate of inflation falling

Written in line with our editorial policy.

New data from the Financial Conduct Authority’s (FCA) Financial Lives Survey has found that over a quarter (28%) of UK adults are not coping financially or finding it difficult to cope with the higher cost of living.

Released on 10 April, the survey is a stark reminder that despite inflation coming down and the financial climate improving over the last 12 months, many people are still struggling on an everyday basis. 

As a result of the economic climate, a staggering 44% of respondents have either paused their saving and investing efforts, or scaled back the amount they save away. Almost a quarter (23%) of people have been forced to access their savings or investments to get by.

Older people feel less affected

It seems age is a significant factor in how financially secure a person is. According to the survey, of the 14.6million UK adults estimated to feel unable to cope financially, 39% are in the 35-44 age category. That’s almost four times the amount (10%) of adults aged 75+ who feel the same. This is perhaps due to older people having fewer monthly commitments to bigger costs such as mortgages and childcare, for example.

The FCA runs the survey each year, with this latest one collating results from 3,450 individuals in January 2024. The results have been compared to those from their similar survey 12 months prior in January 2023. 

In a bid to make their money stretch further, more than three quarters of people (77%) in the survey reported either reducing their spending or increasing their work hours. 

Additionally, 11% of participants stated that they have no disposable income each month. It equates to 5.9million UK adults having no money left over after bills and essentials are paid for each month. 

This can cause real problems when unexpected costs come up, such as urgent home repairs, vehicle repairs or veterinary bills, for example. This updated figure is however a 4% improvement on a year ago, when 15% of people were in the same boat.

Fewer people feeling ‘heavily burdened’ by bills

There were other improvements in the survey, too. For instance, despite 14% of people in the UK (7.4million) feeling heavily burdened by their domestic bills and credit commitments, it is a 7% improvement from the 21% of adults (10.9m) who felt the same way in January last year. 

That means 3.5million UK adults no longer feel heavily burdened by their bills and debts in this last year – a welcome step forward.

More people asking mortgage lenders for payment holidays

With more than a quarter of people feeling that they are not coping financially or finding it difficult to cope, it seems that more are turning to their mortgage company to make ends meet. 

The survey found an increase in the number of struggling mortgage holders asking their lender to reduce their monthly payments or agree to a payment holiday. The number rose from 0.4% in their January 2023 survey to 1.6% in the 12 months to January 2024.

The survey draws attention to a key issue for people struggling financially. It appears that many adults who may benefit from valuable help from lenders or debt charities are not actively seeking it. 

The survey found that just one in five (21%) adults who felt heavily burdened by their debts sought help in the last year. It highlights the urgent need for a greater awareness of what help is available to people and how they can access it.

If you are struggling with debts, there are several UK organisations available to help. These include the National Debtline (T: 0808 808 4000) and StepChange (T: 0800 138 1111), both of whom provide free, impartial debt advice to anyone who needs it.

Financial options to boost your income

For homeowners struggling to make ends meet, there are a number of options you may  consider to boost your day-to-day income. 

Downsizing is a popular option for many people in or approaching retirement, especially if your children have left the family home and you now have more rooms than you need. Downsizing isn’t right for everyone of course. You might not wish to sell the home you love, or you might not be able to downsize any smaller than what you currently own. 

If you are 55+ with little or no mortgage, then another option you could consider is equity release. This allows you to unlock some of your home’s value without having to move or sell up. You could use this tax-free cash to pay off your mortgage, clear your loans and credit cards, take a much-needed holiday and much more.

There are typically no monthly repayments to make with equity release, and there are interest payment plans available if you don’t wish your loan to grow. A plan does however reduce the value of your estate, so you’ll need to think carefully before securing other debts against your home like equity release.

There are other financial options to consider too, such as borrowing from family and arranging a retirement interest-only mortgage. You can read more about the alternatives to equity release here.

Speak to a specialist

If financial worries are keeping you awake then don’t worry, our friendly selected specialists are here to help you explore the option of equity release. They will be happy to compare plans, check if you are eligible for enhanced terms based on your health or lifestyle, and tell you how much money you could unlock.

Simply call us on 0800 096 2215 or request a call back and we’ll arrange a no-obligation appointment with an adviser for you. 

Sources:

Report on consumers and the rising cost of living: Financial Lives cost of living (Jan 2024) recontact survey. Financial Conduct Authority. Accessed 30 April 2024.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn