Over-50s not planning enough for financial shocks in retirement

Less than a fifth (19 per cent) of all UK savers have fully considered getting a serious illness in their retirement plan, but only 16 per cent of over-50s said they were prepared for this, compared to 25 per cent of those under 50, research from Barnett Waddingham has found.

The firm’s analysis highlighted that UK pension savers aged 50 and over “consistently underperform” younger savers and were less prepared for financial shocks in retirement such as ill-health, relationship shocks and urgent financial support needs from their wider family in retirement.

The report also showed that 43 per cent of this older age group had ‘thought about it’ but not included it in their retirement planning, and almost a third (32 per cent) had not considered it at all.

In addition to this, 17 per cent of all respondents had considered the possibility of going into care and showed that in their retirement plan, made up of 14 per cent of over-50s, and 22 per cent of under-50s.

Meanwhile, 39 per cent of over-50s have thought about it but not included it in their planning, while 35 per cent have not considered it at all.

However, Barnett Waddingham warned that with around 300,000 over-65s living in care homes in England and Wales, at an average cost of about £60,000 a year, it was an important facet of planning for later life.

The research also pointed out that the majority of people who were married or in civil partnerships had not planned for changes to their marital status, as 18 per cent of married people had fully planned for becoming widowed.

Barnett Waddingham suggested that it was not just romantic relationships that had the potential to impact retirement, as families could have an impact on spending and saving plans too.

A fifth (21 per cent) of parents had fully planned for their children needing urgent financial support during their retirement, as 30 per cent of under-50s said so compared to 16 per cent of those over 50.

However, 12 per cent of British employees had planned for their parents needing urgent financial support while they are retired, including 20 per cent of those under 50 and 7 per cent of those over 50.

The research also revealed that almost a third of British employees mostly think about their own personal income and spending when planning for retirement, with 36 per cent mostly thinking about their relationship, the income and spending of themselves and their partner or spouse. Meanwhile, 25 per cent think about their wider family, including children.

‍