Low savings drive higher mental health costs for UK workers

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A recent study revealed that more than 11 million Britons have less than £1,000 in savings. Euronews analyzes the data and the situation in the rest of Europe.

One in three working-age adults in the UK have less than £1,000 (€1,175) in a savings account, according to a new report from the Resolution Foundation.

This means that more than 11 million people may struggle to cope with unexpected “hard days”, such as a family crisis or not being able to save enough money for retirement.

Due to the cost of living crisis, people with small savings have to borrow in times of need. Even those with savings of more than £1,000 (about 18%) said they used credit cards, overdrafts or formal lenders to cover daily living expenses between July 2023 and October 2023. Borrowed from.

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The Resolution Foundation also found a direct link between low savings and poor mental health. When savings dwindle, it can lead to anxiety and poor mental health. Conversely, worsening mental health may make it harder to save, potentially impacting income.

According to the same study, the figures on saving for retirement are also discouraging. About 39% of people between the ages of 22 and state pension age (currently 66, but rising to 67/68 between 2026 and 2028, and a total of 13 million people) were not saving enough for retirement. Experts believe the target replacement rate for a comfortable pension would be at least two-thirds of pre-retirement income.

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Rest of Europe

In contrast, EU savers fared better: Households across the EU saved an average of 12.7% of their disposable income in 2022. Still, this was a significant decline from the 16.4% recorded the previous year, Eurostat reported.

Germany leads the way with an average savings of 19.9%, the highest gross savings rate among EU members in 2022. The Netherlands is in second place with 19.4% and Luxembourg with 18.1%.

In 2022, savings rates for the other 12 EU members were recorded at less than 10.0%. Poland and Greece were among them, recording negative rates of -0.8% and -4.0% respectively and indicating that many households spent more than their gross disposable income.

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Like the United Kingdom, these savers spend the extra money they had accumulated in previous periods or resort to borrowing to meet their expenses.

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