Research from pensions and retirement specialist LV= highlights how personal finances of millions of people are being affected by the rise in the cost of living.

LV=’s latest Wealth and Wellbeing Monitor, a quarterly survey of 4,000 UK adults, reveals that more than half of people expect their finances to worsen over the next three months.

Respondents say their total monthly outgoings are rising; they are saving less while spending in supermarkets is rising and socialising is falling.

Clive Bolton, managing director of protection, savings & retirement, said: “Millions of people are being squeezed financially as rising energy bills, interest rates and inflation reduce their spending power. People are now more pessimistic about their finances than at any time since we started the Wealth and Wellbeing research programme in 2020.”

The LV= Wealth and Wellbeing Monitor ­reveals:

• Worsening financial outlook: – 57% (30m) expect their finances to worsen over the next three months
• Deterioration in finances over past three months: 59% (31m) say their finances have deteriorated over the past three months. Retirees were most likely to say there has been no real change in their finances (40% vs. 29% of 35-54 year olds).
• Outgoings increase: 67% (35m) say their total monthly outgoings have increased over the previous three months.
• Saving falls: 33% (18m) said the amount they are saving has fallen in the last three months
• Supermarket spend is up, socialising down: 63% (33m) have seen an increase in their supermarket spending, while 33% (18m) are spending less money on socialising

Consumer confidence about their finances has worsened over the past 12 months

• 9% (5m) of UK adults have described their financial situation as “struggling a lot” and this has increased each quarter over the past year (up from 5% Sept 2021).
• 27% (14m) say they have seen a significant increase in outgoings
• 40% (21m) say they are worried about money (28% Sept 21)

Not all demographic groups are being affected equally by the increase in living costs. More affluent retirees appear protected from many of the worst effects of the economic crisis, due to many having a good amount of savings and having paid off their mortgages. Retirees were far more likely than other ages to say they can currently comfortably afford their day to day costs and bills. (60% of retirees said this compared to 36% of 35-54 year olds).

Bolton added: “The results of the latest LV= Wealth and Wellbeing Monitor highlight how the finances of millions of people are being squeezed by the large rise in the cost of living.

“Consumer sentiment had been steadily improving between spring and early autumn 2021 but has deteriorated sharply since the start of the year.

“Fortunately unemployment remains low and nearly one in five people surveyed (17%) said their income from work has increased over the past three months. However, many people are concerned that their pay is not keeping pace with rising prices.

“The result is that a third of people (33%) say they are now saving less, one in 10 are saving less into a pension while over 60% are spending more at the supermarket.”