The myth that older people are more prepared for retirement is just a myth, according to new research from independent consultancy Barnett Waddingham.
Only a fifth of all savers in the UK (19%) have fully considered getting a serious illness in their retirement plan, Yet surprisingly, it’s the under-50s driving this; 25% have prepared, versus just 16% of over-50s. 43% of this older age group have ‘thought about it’ but not included it in their retirement planning, and almost a third (32%) have not considered it at all.
Similarly, just 17% of all respondents have considered the possibility of having to go into care and reflected that in their retirement plan – made up of 14% of over-50s, and 22% of under-50s. 39% of over-50s have thought about it but not included it in their planning, while 35% haven’t considered it at all. Yet with around 300,000 over-65s living in care homes in England and Wales, at a average cost of about £60k a year, it’s an important facet of planning for later life.
Most people who are married or in civil partnerships have also not adequately planned for changes to their marital status. Just 18% of married people have fully planned for the possibility of becoming widowed, while 40% have considered it but not planned for it, and 31% have not considered it at all.
For anyone in a relationship, a mere one in ten (10%) have financial plans for getting divorced or breaking up – falling to 7% of over-50s, compared to 16% of their younger counterparts. 22% of these older workers have thought about it but not considered it, 37% haven’t considered it, and 39% say it wouldn’t be possible.
What’s more, a fifth (21%) of parents have fully planned for their children needing urgent financial support during their retirement. This is once again driven by the under-50s at 30%, and is true of just 16% of parents over 50.
In the other direction, 12% of British employees have planned for their parents needing urgent financial support while they’re retired – including a fifth (20%) of those under-50, and just 7% of over-50s.
Almost a third of British employees mostly think about themselves – their own personal income and spending – when planning for retirement. 36% mostly think about their relationship – the income and spending of them and their partner/ spouse. And a quarter (25%) think about their wider family, including children.
Older workers – the over-50s – are more likely to think about themselves first; 25% predominantly plan for themselves, versus 29% of under-50s. They’re more likely to think about their relationship (39% vs 32%), and much less likely to think about their wider family and children (20% vs 32%).
Parents are more likely to think about their wider family than non-parents, at 29% vs 18%, and women are more likely than men (28% compared to 22% of men). Mark Futcher, Head of DC at Barnett Waddingham, commented:
“Poor planning is 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. There is time to avert this looming crisis … but there really is no time to lose.
The industry needs to urgently engage and educate people, especially those in their 50s and above. It’s not just about instilling in them the importance of planning, but about making sure they have the necessary tools to do so 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.”
