MortgagesOct 22 2014

Life goals cost Britons £877,000 – Lloyds Bank

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The average cost of funding typical life goals is £877,000 in the UK and as high as £1.2m in London, according to Lloyds Bank.

The Lloyds Bank Family Savings Report said the average cost of getting married was £11,168 for UK couples between 2010 and 2014.

It said other costs included the average amount spent on newborn babies during their first year, which is £3,069.

Add to that the cost of buying a house, around £175,000 for a typical three-bedroom semi-detached house in the UK, and the cost of retirement, which the report estimated was £685,000 for a couple.

The average married couple borrowed around 50 per cent of the total money used to fund their own share of wedding costs, only 9 per cent of people marrying had to borrow all of the money they spent on their wedding, while 43 per cent managed to fund their wedding entirely from savings.

The average first-time parent has to borrow 9 per cent of first-year baby costs, while almost three-quarters manage to avoid borrowing for a newborn altogether.

The report claimed that those who started saving early in life were 50 to 57 per cent more likely to gain ownership of property and investments in their 40s and 50s.

For example, among those 45-64 year-olds who started saving seriously before age 25, 55 per cent now owned their home outright, whereas among those who only started saving seriously at age 34 or later, only 35 per cent owned their home outright.

Philip Robinson, savings director at Lloyds Bank, said: “The average cost of meeting our lifetime goals is almost a million pounds, which is a daunting figure for anyone. However, the report clearly shows that by getting into the saving habit early you can significantly improve your financial health later in life”

Carol Knight, operations director at the Tax Incentivised Savings Association said: “This report highlights the importance of starting to save as early as possible if people are to fulfil their life goals. Currently only one third of British families save regularly and a further third have no money left at the end of the month to set aside for savings. This has to change. We, the industry, must work together with policymakers to deliver a financially healthy society where the benefits of saving can be felt by everybody.”

Adviser view:

Andrew Neligan, a financial planning director with Informed Choice in Surrey, said: “It’s easy to simplify these costs, but the chances are that with inflation, and taking into account additional moving costs and childcare, particularly if you live in the south east, the cost of meeting lifetime goals will be well over £1m.”