Collapse in saving by people under 50
Sudden decline put down to property tax deadline and paying off debts
THERE has been a sudden sharp decline in the numbers of people under the age of 50 who are saving.
Experts say the collapse in numbers – from 36pc saying they saved in April, to just 28pc saving in May – was because most younger people do not have the funds to save.
And those that do have spare money are using it to pay down debt.
The latest Nationwide UK (Ireland) survey carried out by the Economic and Social Research Institute (ESRI) shows that fewer than three out of 10 of those under the age of 50 are saving money in a bank, post office or credit union.
This is down from more than four out of 10 of those under the age of 50 who told surveyors they were saving this time last year.
Brendan Synnott of Nationwide UK (Ireland) said the upcoming deadline for paying the property tax next month may have forced those in their 30s and 40s to pull back from saving.
There was an overall fall in the numbers saving in May, but the sharpest decline was among those in the under-50 age groups.
"The positive indicator of a return to regular saving recorded over the past two months has fallen back in May as the majority of people, and particularly the under-50s, say they are not saving regularly," he said. "However, it is possible that this is a temporary setback triggered by the deadline for registration for the new property tax at the end of May. We may yet see a healthier picture emerge in regular saving behaviour in the coming months."
Separate research by the ESRI last month found that those aged under 45 have been affected "dramatically" more by the property crash and recession than those 45 and over.
The younger age group on average spent 20pc less per week in 2009 and 2010 compared with five years earlier.
Over the same period, those aged over 45 managed to keep most of their bubble-era gains, spending 31pc more each week than they did in 2004 and 2005.
Younger people are more likely to be suffering from unemployment, negative equity and mortgage arrears than older groups, the ESRI found.
Families with children have been most impacted by the downturn, the study found.
And financial experts said savers of all ages have probably turned against saving after severe cuts in savings rates.
The An Post savings schemes, designed by the National Treasury Management Agency, saw their interest rates cut by up to 40pc in the past two weeks.
And banks have been cutting the interest they pay savers every month since April last year, according to the Central Bank. Households have €92bn on deposit in banks.