Middle managers feeling the squeeze

Apr 07 2008 by Nic Paton Print This Article

Middle-income families in Britain are cutting back on their spending and even taking on second jobs in an attempt to ease the growing strain on their finances.

While the problems faced by those on lower incomes are perhaps more obvious, there is a real risk that better off households ignore their own financial problems until it is too late, the poll by insurance company AXA has warned.

It found nearly three quarters of households with a total income of £30,000 ($60,000) or higher would be taking steps this year to cut spending.

Its poll of almost 6,000 people showed that some 15 per cent of more affluent households had been forced to get a second job or to send a non-working member of the household out to work.

Worryingly, around one in five high earners had either stopped saving or reduced their pension contributions as concerns over the credit crunch hit home.

The most common reason for failing to save for retirement was lack of money left over at the end of the month (30 per cent) while 15 per cent blamed it on the burden of house prices, and the same amount cited paying debts was their main obstacle.

Around eight per cent were considering not renewing protection insurance to cut costs, meaning as many as 1.1 million households could go without life insurance or critical illness cover this year, it added. More than four out of 10 said they would be eating out less to cut costs, while around a fifth said they would socialise less with friends.

AXA spokesperson Steve Folkard said: "It's no wonder that households with above-average incomes are struggling to cope. A typical family in middle Britain may have a higher than average income but millions are weighed down by high lifestyle costs and face tough choices as the strain on their finances takes its toll.

"One of the biggest issues however is that many seemingly well off households lack the motivation to tackle their problems. We've had it easy for so long and been happily spending without thinking of the consequences that now people aren't sure what to do.

"If we don't tackle this issue this group are in for a wake-up call in retirement. A significant proportion of people who enjoy high incomes may now well find that things are a lot tougher later in life.

"Planning for the financial future and particularly retirement is more than simply deciding what you want to do. It is also about making sure you will have enough money to accomplish these goals – unless this group takes action now they might find it will struggle to maintain its lifestyle once it's too late," he concluded.