Retirement Planner – Lockdown Savings are Not the Key

The lockdown –  or should I say lockdowns – gave many of us time to take stock. Cooped up in our homes for months on end, thousands if not millions of people wisely decided that it was the time to save. But will this savings resurgence continue as we head toward a life after lockdowns? And will it have made a difference to the next generation of retirees?

According to stats from the Bank of England reported by Aviva, ‘restricted movements during the first pandemic lockdown saw households’ monthly savings temporarily soar to an unprecedented £27.5bn in May 2020.’[1] A good start, certainly. But, then again, what was there to spend on? Restaurants were shuttered, cinemas closed, and they even turfed us out of the pubs for what seems to have been years, right?

Nevertheless, it is heartening that the Great British public realised that the initial lockdown was a wise time to tighten their belts. In fact, even now after the novelty of the first lockdown has well and truly passed, many people are still topping up their savings. In August of this year, £9.1bn was deposited with banks and building societies, which is nearly double the pre-pandemic monthly average of £4.7bn[2]. These figures, again reported by Aviva, go some way to show that Brits are still being cautious with their money even though we are, hopefully at least, well through the worst of Covid.

However, this isn’t the case for everyone. There is a worrying number of people who have rapidly blown through any savings they’ve made during lockdown, and now face the dual threat of less coming in with sometimes next to nothing to fall back on.

According to a Censuswide survey, again on behalf of Aviva, as many as 20% of those who had put more away in lockdown have now spent everything they saved. Plus, as many as one in four claimed that their lockdown pot would run dry by the end of the year.[3].

Despite many saving more in lockdown, the majority are also facing worries about spiralling retirement costs. Some 79% of 45 – 54 year olds – the next generation to retire – say that they are worried about their retirement costing too much.[4]

Essentially, regardless of the stats and whether lockdown has helped people save or spend, people are rightly worried. Generation X knows that their retirement is going to be completely different from their parents and grandparents experiences, and savings and pensions simply won’t stretch far enough.

Accessing property wealth – whether through remortgaging, downsizing or options like equity release – will surely have to become a larger part of the Generation X retirement plan. While some people have saved and others have spent in lockdown, property prices have ticked along setting records across the country.

The stamp duty holiday – which Rishi and co launched way back in June 2020, before twice extending until the end of September this year – hugely stimulated the market and ensured property prices remained buoyant. In fact, the market has been far more than just buoyant as prices have rocketed upwards and flown in the face of many naysayers’ initial predictions.

As ever, the property market has been an area of financial solace for millions of people. The average property price nationwide – which, according to the Halifax, hit a record £262,954 in August – did tail off slightly in the summer months, but yet again roared back with a record September. Summer losses were reversed as average prices hit yet another new peak at £267,587 in September, up 1.7% nationwide and representing the strongest monthly rise in some 14 years.[5]

Ultimately, assets like property are standing tall while others around them shrink and struggle. For retirement savers who own a property, using it to fund their later life will become more and more essential.

Of course, products like the lifetime mortgage will only ever be right for a relatively small number of retirees, but we need to be honest about how property will become central to most people’s post-work life. If we can all accept that property, as much as if not more so than savings or pensions, is the key to a financially comfortable retirement, equity release will reach many more customers who need it. 


[1] https://www.financialplanningtoday.co.uk/news/item/13679-8-in-10-gen-x-concerned-about-retirement-affordability

[2] [3] [4] ibid

[5] https://www.theguardian.com/money/2021/oct/07/uk-house-prices-show-strongest-monthly-rise-since-2007