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Income Roulette: A study of UK financial resilience

Evidence type: Insight i


Every year, almost a million people in the United Kingdom are unable to work for a month or more because of sickness or an accident. These ‘income shocks’ can lead to financial upheaval, but also to emotional and health issues. While some people can put safeguards in place – such as savings or income protection schemes – many people simply can’t afford these, or are unaware of them/choose not to contribute to them. Accordingly, many people are unable to cope with a sudden loss of income.

The study

This 2017 report from Liverpool Victoria Friendly Society LTD (LV=) examines several large sections of society who are the most vulnerable to financial difficulties in the event of a sudden loss of income. The report focuses on three groups:

  • ‘Generation debt’ – older millennials, particularly those who rent their accommodation, who often find themselves with credit card and loan debt.
  • Self-employed people – who form a large part of the UK’s economy, but without the safety nets offered by employers, such as paid sick leave, holiday, and pension schemes.
  • ‘Middle Britain’ (the ‘squeezed middle’) – ‘ordinary’ working families who have relatively high levels of household income, but also high levels of outgoings.

The two methods of data collection were:

  • A nationally representative survey by YouGov of 9,458 UK residents, aged 18 and above. Data was collected in July 2017.
  • Focus groups conducted in September 2017 with 24 respondents, representing key segments from the research.

Key findings

Overall findings across the UK showed that:

  • Six-in-ten people believed that they were financially capable
  • A third (33%) didn’t think that they could handle a personal financial crisis
  • 32% worried that they would never be able to save ‘for a rainy day’
  • Only 37% of people in the UK have three months worth of outgoings in savings

Looking at the findings among the three main groupings introduced in the report:

  • ‘Generation Debt’ are 25-34 year olds (‘older millennials’) who account for over 8 million people in the UK.
    • 44% of this group aren’t confident in their ability to handle a personal financial crisis (compared to a UK average of 33%).
    • Two-thirds (65%) do not have three months worth of outgoings in savings (compared to 37% overall in the UK).
    • Over four-in-ten (43%) don’t save any money each month.
    • One-in-five of this group (20%) have unsecured debt of more than £5,000.
    • This group are three times more likely to have a loan from friends or family (12% compared to 4% nationally).
  • ‘The Self-employed’ – this group account for 4.8 million workers in the UK.
    • Nearly two million self-employed people in the UK are unable to save any money each month.
    • A third (33%) do not have three months worth of outgoings in savings.
    • Four in ten believe – incorrectly – that because they are elf-employed they are ineligible for income protection insurance.
  • ‘Middle Britain’ – the ‘squeezed middle’ refers to typical working families, accounting for almost 13 million people in the UK. In this research, it refers to one or two child families, with the parents aged between 24-60 with an annual household income of between £25,000 and £45,000.
    • Three-in-five (59%) people in this group have less than three months worth of outgoings in savings.
    • Three-quarters (75%) say that the majority of their income is spent on household bills.
    • Just over a third (37%) are confident that they could handle a financial crisis (sudden drop in income).
    • Almost two-thirds (63%) of this group have mortgage commitments.

The report also includes qualitative evidence from the focus groups, with a recurring theme being the lack of awareness of income protection insurance.

In conclusion the report suggests several areas for action, including:

  • The new Single Financial Guidance Body (SFGB) should prioritise promoting and building financial resilience.
  • The SFGB should target financial guidance at specific life events, such as taking out a mortgage, starting a family or changing jobs.
  • Alignment between state and private provision, particularly with regard to individual income protection benefits under Universal Credit, which the report says effectively penalises people who have already made their own provisions.
  • Financial products must become more accessible and inclusive.

Points to consider

  • Methodological strengths/weaknesses: Much of this research is based on surveys carried out in 2017 by YouGov. These surveys are nationally representative.
  • Relevance: This report has limited relevance to policy as it openly has an interest in promoting income protection insurance, but the findings may be of relevance to stakeholders with an interest in the three groups targeted by this research.
  • Generalisability/ transferability: The research is applicable to the United Kingdom, with surveys conducted in England, Scotland, Wales and Northern Ireland.

Key info

Client group
Year of publication
United Kingdom
Contact information

Justin Harper, Head of Protection Policy at LV=