Economic Myths: Household savings have risen 300% since 1975

From This Is Money:

Households today have around four times the level of savings that the typical family had in real terms 40 years ago, new findings suggest.

Taking into account pensions, shares and deposit savings, the level of savings held by a typical family has risen by 294 per cent in 40 years to £145,566, compared to £36,989 in 1975, Lloyds Bank said.

Well duh. People haven't "saved" particularly, i.e. put earned income aside, it is just that "assets" have gone up in value.

1. "Pensions" is too vague a term. Do they just mean shares etc in funded pension schemes or also the net present value of unfunded schemes?

2. I don't know what the FTSE share index would have been in 1975, but since 1985 it has increased by 365%. Quite possibly and probably a 300% increase in real terms since 1975.

3. About 80% of deposit savings are merely the flipside of mortgage borrowing. If one household takes out a mortgage of £100,000 then some other household ends up with a deposit of £100,000.

The Nationwide tells us that house prices have trebled in real terms since 1975; nowadays mortgages take a lot longer to pay off, so we can safely assume that total mortgage debt has more than trebled; so other people's deposits have more than trebled as well.

Meanwhile, 36 per cent of people across the UK in 2015 have no savings, including deposits or investments, while 13 per cent hold savings and investments amounting to less than £1,500.

4. That £145k is nowhere near what the "typical family" has in savings. The median is clearly closer to £1,500. No doubt the usual Pareto Distribution applies: the top two deciles have got an average of £600,000 each and the next three deciles have got an average of £200,000 (or whatever).