Self-employed vulnerable to financial shocks
Many dream of being self-employed; being your own boss sounds great, especially as the goal of retirement seems to creep further out of reach. But there are drawbacks. Around two million of UK self-employed workers struggle to save any money each month, leaving them vulnerable to financial shocks.
Insurer LV= recently published the second instalment of its Income Roulette report; a study of debt, savings and protection among 9,000 people.
The worrying findings show that self-employed workers spend more on bills than the UK average. And, only 4% of them enjoy the benefit of income protection insurance cover which would kick in if they were unable to work.
The results show that 41% of self-employed people can’t afford to save any money each month, and a further 11% save less than £50. A third of respondents said they could not survive financially for more than three months if they lost their income. This means they don’t meet the Money Advice Service’s recommended amount of savings that should be kept in reserve to maintain a level of financial resilience if an emergency strikes.
Looking at the barriers to saving, LV=’s figures show that monthly bills eat up the wages of almost two-thirds (62%) of self-employed people; this compares with a national average of 56% (taking employed workers into account).
Aware of the risks
Despite the lack of savings and insurance, the research confirmed that the self-employed were aware of the financial risks that come with this method of working. 28% of respondents experience worries about having an accident resulting in them not being able to work. A similar proportion (29%) said they were concerned about falling sick and being put out of commission.
There are around five million self-employed workers in the UK who made a contribution of about £250 billion to the economy last year. If you’re one of them, we may be able to help.
Source information: http://www.lifeinsuranceinternational.com/uncategorized/lv-reveals-heightened-risk-financial-crisis-self-employed/ (04/09/17)