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.

Four in 10 (40 per cent) said they had considered it but not planned for it, while 31 per cent had not considered it at all. 

In addition to this, for anyone in a relationship, 10 per cent had financial plans for getting divorced or breaking up, decreasing to 7 per cent of over-50s, compared to 16 per cent of the younger cohort.

In particular, 22 per cent of these older workers had thought about it but not considered it, 37 per cent had not considered it, and 39 per cent said it would not be possible. 

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 firm acknowledged that many over-50s may no longer have parents, as 52 per cent of this age group said their parents needing urgent financial support would not be possible or was not something to consider.

Despite this, 18 per cent said they had thought about it but not included it in their plan.

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. 

Older workers were more likely to think about themselves first, as 25 per cent predominantly plan for themselves, versus 29 per cent of under-50s.

Indeed, they were more likely to think about their relationship (39 per cent compared to 32 per cent), and much less likely to think about their wider family and children (20 per cent versus 32 per cent). 

However, the firm said other key demographics came into play here, including that parents were more likely to think about their wider family than non-parents, at 29 per cent versus 18 per cent.

In addition to this, women (28 per cent) were more likely than men (22 per cent) to think about their wider family.

The research also found that ethnic minorities are almost twice as likely (38 per cent) to plan with their wider families in mind than white people (23 per cent).

The firm said this was driven specifically by black employees, almost half (46 per cent) of whom plan as a family. 

Barnett Waddingham head of defined contribution, Mark Futcher, said poor planning was almost as bad as not saving, both risk retirees being left “high and dry” later in life.

“The evidence shows we’re at risk of waving goodbye to a lost generation of retirees, cut adrift by insufficient planning, a myopic attitude to the harsh realities of financial shocks, and an unwillingness or inability to ask for help,” he added.

“There is time to avert this looming crisis … but there really is no time to lose.”

Futcher argued the industry “needs to urgently engage and educate people”, especially those in their 50s and above.

He stressed that it was not just about instilling in them the importance of planning, but about ensuring they have the necessary tools and a “true” understanding of the hurdles ahead and their familial financial ecosystem.

“Pension providers are the most popular place for advice for over-50s, which means they have an urgent responsibility to offer fulsome, understandable, and targeted support,” he said.

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