"Woefully inadequate" pension savings will fall far short of potential residential care costs in retirement, research from Barnett Waddingham has revealed.

The study, titled "The At Retirement Reckoning," surveyed over 5,000 UK workers and found a "significant gap" between Britons' expectations for retirement and the financial realities they may face.

The report found the average income expectation from a workplace pension is £20,435 per year.

However, care costs can vary from £1,160 per week for residential care to £1,410 for nursing care on average, according to Barnett Waddingham.

Annually, this could equate to £60,320 per year for residential care or £73,320 for nursing home care – significantly higher than the average workplace pension income.

The research revealed that more than a third (36 per cent) of people expected their health and care costs to increase substantially into retirement. Despite this expectation, fewer than one in five (17 per cent) had fully factored in the need to go into care in their retirement plans.

For those aged 55-64, over half (51 per cent) expected health and care costs to remain stable in the first decade of retirement, and 38 per cent and 30 per cent carried this belief into the second and third decades, respectively.

While fewer (34 per cent) expected increased costs in their first decade, more than two-fifths of this age group anticipated increased costs into their fourth decade of retirement.

However, while 43 per cent of respondents had considered the possibility of getting a serious illness, they had not fully considered it in their retirement plan; 19 per cent had considered it in their plan, while 28 per cent had not considered it at all.

Looking specifically at care, just 17 per cent of workers had considered fully incorporating care into their retirement plan. Meanwhile, 40 per cent had thought about it but not considered it fully, and 31 per cent had not considered it at all.

Commenting on the findings, Barnett Waddingham partner and head of defined contribution (DC), Mark Futcher, said the UK's care crisis was "deeper than we thought."

He stated: "Age UK estimates there are 2.6 million people aged 50+ in England unable to even access care, including hundreds of thousands stuck on waiting lists or waiting for their needs to be assessed.

"Now, our data suggests that millions more are unlikely to even be able to afford it when they reach retirement."

"While there are numerous factors to take into account, what's evident is that very few people are even thinking about their health or care considerations when planning for their retirement.

"As a result, we're at risk of a growing population that could buckle under pressure at even the slightest sign of illness in retirement.

"While education, awareness and financial guidance will play an important part in fixing this problem; time and time again, the inadequacy of auto-enrolment workplace pension contributions is the main problem that must be resolved.

"With details of the government's highly anticipated pensions review still to come, there's an urgent need to fix our pension system to ensure better outcomes for retirees, whether they need care or not."

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