Deadline to Breadline: The average household would last 24 days without income

However the average household believes it can last 90 days

clock • 3 min read

Now’s the time to change perceptions around financial resilience, writes Richard Kateley

The average household believes it can last 90 days if it were to lose its income and rely solely on savings. In reality it is just 24 days.

These are just some of the findings revealed in this year's Deadline to Breadline report,[i] which we have produced since 2013. The report assesses the financial stability of people across the UK by analysing how long people believe they could survive financially if they lost their income - their deadline to breadline.

The perception of those surveyed this year was that the average household would be 90 days from the breadline if it lost its income. But, in reality, we calculate the average household could only last for 24 days, a difference of 66 days and eight days less than the findings in the last iteration of the report in 2017.

We all have a responsibility to make sure clients are made aware of their protection needs to help ensure they have a more financially secure future.

This is the kind of perception gap that the research is trying to expose, along with busting some of the biggest myths and misconceptions which can have a real impact on the effectiveness of some people's financial planning. And it's clear that the Covid-19 pandemic is set to test many people's financial resilience even further.

Good news?

Some good news is that Covid-19 has encouraged consumers to address their debt, with 57% of Brits stating that paying off debt has become more important to them since lockdown, rising to 65% among 25-40 year-olds. Having said that, however, two-thirds (66%) of households have at least some level of debt, with over 1 in 10 (11%) households currently managing more than £10k worth of debt. Excluding student loans, 35-44 year-olds have the highest amount of debt, with an average of £1,184 per household, and 1 in 8 (13%) managing over £10k worth.

One of the main ways people cope with losing their income is to rely on their savings (1 in 3), yet 1 in 5 households have no savings at all and 2 in 5 households have less than £1,000 in savings. The report found that people felt they would need £12,207 to feel financially secure, but it would take the average household four years to save this amount based on what it saves each month. Worryingly, it would take 14 years to save a full year's earnings.

All of this means financial planning has never been so important

It demonstrates the crucial role financial advisers play in helping their clients see through the myths and misconceptions to help build financial resilience.

This report also clearly shows that protection, and especially income protection, is an increasingly important part of financial advice and planning. If clients were unable to work due to incapacity caused by illness or injury resulting in a loss of income, it wouldn't take them very long to reach their deadline and certainly not as long as they may think. Just 1 in 10 believe they are their own biggest asset, yet their ability to earn an income is far more valuable than more favoured tangible assets like their house, cars or indeed their savings.

In times of hardship people look to protect what they have, a consumer need that advisers are well-placed to meet. While protection may sometimes be seen as a less glamorous sector of financial services, it can be one of the most important. This means we all have a responsibility to make sure clients are made aware of their protection needs to help ensure they have a more financially secure future. 

The report can be viewed at legalandgeneral.com/d2b

Richard Kateley, head of intermediary development at Legal & General



[i] Online survey among a nationally representative sample of 2739 UK employed & self-employed consumers aged 21 to 64 in April 2020.

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