Nearly half (43%) of savers have raided their savings or investments to cover unplanned expenses, such as household repairs or spontaneous purchases, in the past year. The average amount withdrawn is equal to £1,373 per saver – a collective withdrawal of just under £24 billion.
However, 18% admit they would not have made these unplanned withdrawals if they had received higher rates of return. A further one third of savers (32%) admit they would have withdrawn less for the same reason, while 41% regret some or all of the withdrawals they have made.
Instant access to funds also appears to be drive the number of unplanned withdrawals, with one in five (22%) admitting that instant or penalty-free access to their savings and investments increases the likelihood that they will raid their accounts.
Needing to cover everyday living costs, such as food shopping, is the main reason why people raided their savings or investments (27%). Funds to cover the cost of holidays (21%), unexpected bills such as emergency home repairs (21%), cars (18%) and home improvements (18%), complete the top five reasons.
Andy Brown, investments expert at Prudential, said:
“Household budgets are under a lot of pressure so some unplanned withdrawals from savings or investments are inevitable, but raiding these hard-earned savings to fund one-off or impulse luxury purchases, such as holidays, should ideally be avoided. Establishing a regular savings habit that’s sustainable and having a clear understanding of your long-term savings goals is the best way to maximise returns and help reduce the need to make unplanned withdrawals."
