5 to Thrive
The key pillars for financial resilience
Life may be unpredictable, but we can take steps to secure our financial future. Financial resilience is key to weathering any storm. Many of us are unsure how resilient our finances are or how we compare to others.
That’s why we’ve partnered with Oxford Economics to create a unique index that measures the nation’s financial resilience across our 5 to Thrive pillars.
New HL Savings & Resilience Barometer
Wages have been rising faster than inflation for over a year, leaving people with more money in their pockets, and more savings. After a few difficult years, they’d be forgiven for feeling like they’re back on top of their finances. But at the same time, worrying gaps have been appearing in retirement savings.
Using our unique index measuring the state of the nation’s financial health, alongside Oxford Economics we’ve produced HL’s January edition of the HL Savings & Resilience Report. We’ll explore weaknesses in household finances, which regions are more financially resilient than others, and the risks for 2025.
People feel better off
The amount of money people have after tax and inflation jumped in the first half of last year and has remained higher ever since. It means households have more money left at the end of the month – up from £92 in 2019 to £196 at the end of 2024.
Having more spare cash also means they’re saving a bigger percentage of their income on average than we have for the past couple of years. The number of months worth of essentials they can cover with emergency savings has risen from 2.6 months in 2019 to 5.6 months today.
As we saw in previous editions of the Savings & Resilience Report, the impact hasn’t been felt equally across the country.
Households earning between £51,000 and £116,000 have seen a 30 percentage point rise in the proportion with enough emergency savings, while those making less than £26,000 saw the proportion with enough savings fall.
How much cash should you hold?
But problems lurk in long-term finances
But while they’re distracted by the extra money in their pockets, there’s a risk people are missing the bigger picture, and the fact they’re less likely to be on track for a moderate retirement income.
The average pension saving gap has quadrupled since 2019 to £31,546. This shows how far people are falling short of the pension savings they should have for a moderate retirement income by now.
The change owes much to how inflation has ramped up how much people need to live off in retirement. The amount we need for a moderate standard of living has shot up almost 40% from pre-pandemic levels. Nobody is immune, because all wage brackets face more of a shortfall.
Regional differences
There continues to be huge variations across the country. The affluent home counties are the home of higher overall resilience, which owes something to higher rates of home ownership (69% – 13 points above the national average).
It also helps they have higher incomes and more money left at the end of the month at £361 (£165 higher than the national average).
The lowest scores are clustered in London, which scores particularly poorly for home ownership and retirement savings. They’re also in a band across the middle of the country that stretches from Wales to the East Midlands.
How much money you have at the end of the month depends on both income and expenses, with London local authorities making up eight of the top 10. It indicates London incomes in better-off boroughs are likely to be high enough to more than make up for extra costs.
Even those London boroughs with less cash left at the month stay out of the bottom 50 in the UK. The 10 boroughs with the most cash left over have an average of 3.5 times more left in the bank than the 10 boroughs with least left at the end of the month.
Home ownership matters too, especially as we approach retirement. It’s one reason why local authorities in the home counties do best for retirement resilience, while London and other cities, where more people rent, have lower scores.
The lowest outside London is Manchester
Pension savings are key too, and in the top 10 local authorities for retirement resilience 49% are on track for a moderate retirement income – compared to 24% in the bottom 10.
The organisations where people work feeds into this. It’s one reason why in Yorkshire & The Humber, where a higher proportion of households work for the public sector, retirement resilience is higher. The average pension gap is £33,652 compared to poorer performing areas in London where it’s £53,261.
Lower home ownership (54% compared to 68% in rural areas) is one reason why overall, being in a city is likely to mean you have lower resilience.
City local authorities make up 26% of all local authorities – but over half of the 50 lowest scoring ones. It means you tend to have stretched finances in the short term, and face a housing issue in retirement. It’s also because younger, single households are more likely to be in cities, and have lower resilience.
The future
We’re expecting more of the same in 2025 – as short-term resilience rises and long-term resilience falls. Wages should beat relatively stubborn inflation, so real disposable income is set to rise 0.4%.
Savings may rise more slowly, but still ahead of pre-pandemic levels. However, needs in retirement are growing. Higher mortgage rates for longer could put a lid on house price growth, so people’s equity in their home grows slower, stunting their preparations for retirement. It means the overall score is likely to be unchanged.
See how resilient your area is
5 key pillars for financial resilience
Invest to make more of your money
Investing offers the potential to make your money work harder for you. That’s why we’ve looked at households who are investing for the long term.
Plan for later life
For most of us, pension savings will be our bread and butter when we stop working. We’ve looked at how to build long-term financial resilience for life after work.
Save a penny for a rainy day
Rainy day savings are a key part of financial resilience. We’ve examined who has enough emergency savings, extra cash, and access to benefits like sick pay and redundancy packages.
Protect you and your family
Protecting your income and ensuring your loved ones are supported if you're unable to contribute is crucial. We've explored how families can financially navigate the loss of a household member or the main breadwinner's income.
Control your debt
It’s essential you manage debt to benefit you in the long run, rather than letting it negatively impact your daily life. We’ve looked at how to manage debts.
Want to know more?
Discover more about the powerful index we've developed in collaboration with Oxford Economics and gain deeper insights into how it measures financial resilience across the nation.
Our full report is packed with valuable information that will help you understand the true picture of financial security today.
Curious about how we've calculated and measured each of the 5 to Thrive pillars? Our methodology document, published by Oxford Economics, dives into the details and explains the research behind our findings.
For a comprehensive view of all our reports and resources, including expert insights and in-depth analyses, explore the full range of documents we've made available.
View all reports and documents
Want to talk?
For further information or any questions, contact us.
Important information – This page is designed as guidance, not personal advice. Learn more about the differences between the two. If you’re still not sure what’s right for you, you should ask for advice. All investments and any income they produce can fall as well as rise in value so you could get back less than you invest, especially over the short term. Past performance is not a guide to the future.