Majority of people unprepared for major financial shocks - claim

A wealth management firm has highlighted that many Britons do not feel prepared for the major financial shocks that arise before retirement.

New research undertaken by YouGov for Mattioli Woods reveals that while Britons recognise the importance of planning many do not feel prepared for the major financial shocks and life events that could arise before retirement.

These include needing long-term care or support with everyday living, losing the ability to manage their own finances, supporting an ageing parent or relative, and experiencing a relationship breakdown or divorce.

Almost half (44 per cent) of respondents said they do not feel financially prepared for any of the major life situations presented to them, highlighting a significant gap between the desire to plan for the future and feeling ready for the financial realities that life can bring.

The sense of unpreparedness is particularly pronounced among those aged 45–54. More than half (53 per cent) of people in this age group said they do not feel financially prepared, compared with 32 per cent of those aged 55 and over.

Women are also less likely than men to feel financially prepared for the future, with 48 per cent saying they do not feel prepared compared with 40 per cent of men.

When presented with a list of major life events, respondents in Scotland (49 per cent), the Northwest (49 per cent) and Yorkshire (48 per cent) felt the most financially unprepared, followed by the East Midlands (46 per cent), Southeast (45 per cent), Southwest (44 per cent), West Midlands (43 per cent) and the Northeast (42 per cent).

Despite these concerns, the findings suggest that Britons recognise the value of planning ahead. On average, respondents believe people should start making serious plans for their long-term financial future at the age of 28.5.

Amit Joshi, managing director of wealth at Mattioli Woods, said: “Many people understandably think about financial planning in terms of retirement and making sure they have enough money for later life.

“But our research shows that the financial events people feel least prepared for can often happen much earlier.

“Needing long-term care, supporting an ageing relative, experiencing a relationship breakdown or losing the ability to manage your own finances can all have a significant impact on an individual's financial security.

“These situations are difficult to predict and, understandably, are not always the things people want to think about when planning for the future.”

The findings point to a particular challenge for those approaching later life. While people aged 45–54 may be increasingly focused on retirement, they are also more likely than those aged 55 and over to say they do not feel financially prepared for the major life situations presented.

Josh added: “The fact that people believe serious financial planning should begin before the age of 30 shows there is widespread recognition that planning ahead matters.

“However, financial resilience is about more than preparing for a retirement date. A long-term financial plan should also consider what happens if circumstances change along the way.

“Thinking about potential care needs, family responsibilities and what would happen if someone could no longer manage their own affairs can help people and their families feel better prepared for the unexpected.

“No one can plan for every eventuality, but starting these conversations earlier can give people more time, greater flexibility and more options when circumstances change.”

The research highlights a disconnect between the importance Britons place on long-term financial planning and their confidence in being prepared for the unexpected.

As people look ahead to retirement, the findings suggest there is an opportunity to broaden the conversation beyond simply how much money people will need in later life, to include the financial shocks and major life events that could affect them long before retirement arrives.