Nearly one in ten are on the brink of financial crisis as high costs persist

• Mid-lifer's (30–49-year-olds) remain the most financially strained, with only 41% satisfied with their standard of living 
• Families with children under 18 are under acute pressure with almost half (47%) saying they are close to financial crisis or are feeling the pinch 
• Royal London’s annual Financial Resilience Report reveals a significant number of UK households remain financially vulnerable, struggling to stay afloat 

Large numbers of people across the UK say they are facing financial hardship, according to Royal London’s latest Financial Resilience Report.  

One of the most concerning findings is that one in five adults have less than £100 in cash savings, a figure that has remained unchanged for two years. With little or no financial buffer, these individuals are highly vulnerable to rising costs and unexpected expenses. 

The report also found that: 

• One in 10 (9%) are on the brink of a financial crisis and 2% are already in one  
• Mid-life adults are the worst affected age group, with 16% either in or close to a financial crisis 
• Only 41% of mid-lifers are satisfied with their current standard of living 

There were some signs of recovery in some people’s finances. This year, 59% of adults said they had money left over at the end of the month compared to 49% last year, and there was a small rise (£15,864 per person compared to £15,549 in 2024) in the average amount of people’s cash savings.  

However, that improvement is not universal. Among families with children under 18, 47% said they were close to financial crisis or feeling the pinch. Many are already cutting back by reducing heating (36%), curbing social and leisure activities (33%), or cutting back on meals (11%). 

Housing costs and single-person households 

Almost eight in ten (72%) single-person household renters said their housing costs had risen in the 12 months to February 2025, with an average increase of £218 a month.  

Those renting privately saw the steepest rise averaging £304 a month, with housing costs for local authority or social housing rising by an average of £159 a month.  

Among nearly a fifth (18%) of singles and just over a fifth (21%) of single-person households who have a mortgage, monthly costs are higher than a year ago.  

Across the whole sample, over half (53%) of mortgage borrowers said their housing costs had increased in the last year by an average of £327 a month. Among single mortgage borrowers, the rise was £252 a month with those living alone paying £298 a month more. 

Retirement planning and long-term resilience 

The income squeeze has also impacted savings and retirement planning. Encouragingly, only 5% of adults reduced or stopped pension contributions in the past year 

However, 43% of adults admitted that their pension or retirement plans have been affected by the higher cost of living. The report also reinforced the need to encourage people to engage with their pensions, as 69% of adults do not know how much is in their defined contribution pension pot, while 52% have not thought in the last year about how much money they may need for retirement.   

Sarah Pennells, Consumer Finance Specialist at Royal London said:

"We have seen some signs of an improvement in people’s finances in the last year, but those still struggling with higher bills and food prices face difficult decisions as they try to rebalance their household finances. 

"We’re seeing a big divide between those who can absorb higher costs and those making daily sacrifices – cutting back on essentials, dipping into their savings, or going overdrawn at the end of the month.   

"After more than three years of rising costs and higher bills, we’re seeing the impact on people’s longer-term finances, as well as their day-to-day spending. While it’s encouraging that some people have been able to start to build up their savings, it’s very concerning that one in five have less than £100 in savings – exactly the same percentage as in March 2023 when we first asked this question, and unchanged for the past two years.   

"For those feeling the squeeze, it’s worth checking if you’re eligible for state benefits, grants or help from local councils. Many miss out simply because they’re unaware of what is available. Reviewing direct debits and subscriptions can also help – save money, and even the smallest changes can add up over time. 

"We encourage anyone who’s struggling to visit independent resources like MoneyHelper, our charity partner Turn2us, or Citizens Advice, to explore the support they may be entitled to, and take steps to get their finances on track."

Tips to help improve financial resilience: 

1. See if you can save money on bills. Household bills make up a big part of most households’ spending. You may be able to get a cheaper deal and take advantage of social tariffs. There’s more on how to save money in this guide: How to save money on bills - Royal London 
2. Plan properly for rising costs. Try not to rely solely on savings. If you don’t already have a budget, then consider setting one up. Factor in inflation. Even those who are comfortable now may face financial strain as income drops in retirement, and if costs rise further. You can use a spreadsheet, a budgeting app, or make a note on your phone. There’s more information on how to create a budget in this guide: How to make a budget and cut your spending - Royal London 
3. Create a savings buffer. Higher bills make it harder for people who live on their own to build up savings, but without any savings you may have to borrow (possibly at a high interest rate) if you have an unexpected bill or can’t work due to illness. Find out how to set up an emergency fund in this guide: Why an emergency fund is a good idea - Royal London 
4. Consider how you would cope with a life shock. No one wants to think about being unable to work for a long time due to illness or dying unexpectedly. However, this can have profound financial, as well as emotional, consequences. If you’re employed, see what benefits your employer offers (death in service, for example). Calculate how long you could pay your bills for if you or your partner couldn’t work and consider protection plans (income protection, critical illness or life insurance). A financial adviser can help you. 
5. Think long term. When would you like to retire and what would retirement look like for you? Check your State Pension forecast (which you can do on Gov.uk or the HMRC app). Find out how to get your State Pension forecast in this guide: How to check your State Pension forecast - Royal London