Poor health results can render savers only half as financially resilient as someone who is in good health, a financial services company has found.
Data from Hargreaves Lansdown revealed that only 29% who had suffered bad health conditions had provisions for times of financial crises. This compared to compared to 69% who were in good health.
It was also discovered that only 16% of those who were on poor health had enough cash left over at the end of the month to be considered financially resilient, compared to 44% of those who have been in good health.
Households in which the main earner is in poor health have an average of just £87 remaining at the end of each month, in contrast with £311 for those who are well.
Looking further ahead, almost half of the those asked (45%) who were in good health are on track for a moderate pension income when retired. Yet fewer than one in five who have been in poor health said that they anticipated a similar moderate pension pot income.
Sickness is taking its toll
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “Long-term sickness is on the march, and it’s taking a horrible toll on our financial resilience. Those in poor health are around half as likely to have enough savings as those in good health, less than half as likely to be on track for a moderate pension income, and have £224 less left at the end of a typical month. Sickness has a massive impact, especially when it makes it more difficult to work.
“And it’s not just the sick person who pays the price, because there’s the risk their loved ones will need to take on caring responsibilities that could make it harder for them to work too. It’s no wonder that being sick can leave your finances in tatters.
“There’s a horrible catch 22 when it comes to building protection against periods of sickness. If your health is poor, you’re more likely to need to fall back on sick pay or income protection to provide an income when you can’t work. However, if you’re too sick to find work, you can’t get sick pay. Similarly, if you’re suffering from a long-term condition, it can be incredibly difficult to get affordable insurance cover.”
She continued that those with long-term conditions needed to consider all avenues including emergency savings, employer offers and income protection.
She said: “[Having a health condition] means thinking about emergency savings. While we’re of working age, we should be working towards having three to six months’ worth of essential expenditure in an easy access account, which we can fall back on if we’re too sick to work. You should also check what your employer offers, the conditions of your paid sick leave, and ask about income protection.
“If you’re worried that you don’t have enough cover from your employer, you can consider buying an individual policy. You should also think about your pension. If you’re relying on being in good enough health to work continuously into old age, it’s worth considering what would happen if you couldn’t. There’s no need to panic, but it makes sense to revisit how much you can afford to pay into your pension, so you can build a nest egg while you’re well enough to do so.”