As the cost of living crisis continues to squeeze the personal finances of many, research from Canada Life reveals over half (55%) of UK adults, equating to 28.9 million people, have implemented, or are looking at ways to boost their income.
The top ways UK adults plan to increase their current income include selling unwanted belongings (36%), looking for a better paying job (28%) and looking for a second paid job (23%). However, many are also planning to dip into their personal finances to boost their income. Over a fifth (22%) have, or plan to use, savings or investments, 13% have, or plan to access, their pension savings earlier than planned, and 10% have, or are considering, accessing equity in their home.
Additionally, to cover the cost of day–to-day living over the next six months, about a sixth (13%) have, or are planning to take out or increase, their use of credit cards and nearly one in ten (9%) have, or are planning to take out or increase, their overdraft. 8% have, or are looking to take out, a loan from the bank, while the same amount (8%) have, or are looking to, borrow from their parents or friends.
Considering all of this, about seven in ten (71%) UK adults are taking more time to consider what they buy. A similar amount (69%) are being thriftier and watching their money, and almost two thirds (65%) are shopping around for the best deals more than they used to.
Andrew Tully, Technical Director at Canada Life commented: “The cost of living crisis is causing the majority of people to re-evaluate their financial situation. And, with inflation set to reach double-digits later this year, we can expect to see more individuals tightening their belts and looking for additional ways to supplement their income. However, with the research showing that over one in 10 adults are looking to access their pension early, we, as an industry, need to ensure that these individuals are aware of the tax and cost implications of doing so. Not only will your pension have to stretch further into the future, you are likely to pay tax and you can also trigger the Money Purchase Annual Allowance.
“The use of emergency tax on initial withdrawals may mean people initially receive less than they were anticipating, and have to wait for HMRC to pass on the remainder at a later date. It’s worth keeping mind if you plan on topping up your pension in the future the MPAA restricts the amount you can to £4,000 a year, which includes both you and your employers’ contributions.
“While it’s hard to predict how long inflation will remain high, it’s vital that we encourage people to look beyond the here and now, and look at their finances over the medium to long-term. For those concerned about their financial future, speaking to a financial adviser is a sensible step. These professionals can help give a holistic view of your personal circumstances, ensuring that you are on track to achieve your financial goals.”
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