Retirement Planning Seems a Distant Worry When your Children are Using Bicycle Stabilisers, but how can we Ensure the Wheels Don't Come off When They're Older?

25/10/2011 23:59 BST | Updated 25/12/2011 10:12 GMT

Having a family to provide for is one of the biggest milestones in a person's life, so of course it makes sense that having children leads people to take out financial protection - or does it? New research out today suggests the opposite: in many cases parents are actually less likely than their childless counterparts to have certain long-term financial plans in place.

We recently conducted a global survey of 17,000 people, which found that parents are significantly less likely to have a financial plan for retirement than those without children. Two thirds (67%) of childless adults have retirement finances in place, falling to 56% of those with children. The report, is the latest in a long-running series of reports we have conducted to explore global retirement trends and financial planning issues.

The financial pressures of family life can mean parents feel they can't afford to have a financial plan, but I'm often tempted to ask whether people, particularly those with children, can afford not to.

I suspect there are other factors at play here. How many parents are too preoccupied with the day-to-day business of bringing up children to consider the longer term welfare of their family? Retirement can seem a long way off when your children are still using bicycle stabilisers, but making even a basic plan in your thirties is one of the best ways to ensure that the wheels don't come off when they're older.

Maybe it's the term 'retirement' that puts people off. But what we're really talking about here is the whole of your life - through the school years, the university years and on into the days when your children take their own steps into independence, with marriage and children of their own. Financial planning should be considered as a series of pots of money, with different amounts needed at different times, not just at that distant date when you finally retire from work.

Despite a long career in financial services, I was shocked by some of the other figures released today. Nearly half (48%) of parents with dependent children have no financial plan in place and less than one in five (18%) has planned ahead for unforeseen medical expenses. Most worrying of all, nearly two thirds (65%) have not made a will, a fact that is somewhat at odds with the finding that 81% of people aspire to pass on wealth to their children when they die.

All of this, unfortunately, suggests we're a nation of wishful thinkers: when it comes to our children our hearts are in the right place, but too often our money is not. Britain may be feeling the strain post-recession, but it's an all-too-common misconception that you need to be rich to have a financial plan. In fact almost the reverse is true: if you are solely reliant on an income to provide for your family with no savings, how could you possibly manage without it? You are more likely to be richer if you take a bit of time to consider how you can make the money you do have work as hard as possible for you and for your family.

The good news is that it's never too late to start - it's understandable to be a bit overwhelmed about financial planning, but there are some very simple steps that we can all take, which will help to ensure our own financial security and that of family members. But the single most important step is to do it today. It is far better to have a good plan today, than to wait and have the perfect plan tomorrow.

Action 1: Share your financial decision-making. Make sure that financial planning decisions which affect the household - in particular retirement and protection needs - are shared and discussed with your partner, to make sure you are both better prepared for retirement and other life goals.

Action 2: Use life events to start and review your financial plan. Understand the importance of the life events during the different stages of your lives, then use these events as prompts to take action (for example, having children, saving for university fees, dealing with bereavement, divorce etc). It is important to consider the whole family when planning for your own financial needs.

Action 3: Review your financial plan with a professional adviser. Sense-check financial decisions and plans with an expert, to make sure that all eventualities are covered. Many household financial plans contain gaps and omissions: get a professional review of your family's financial plan.

Action 4: Take a balanced approach to managing investment risk. Balance the need to protect your investments in the short- and medium-term with the need to generate an adequate retirement income in the long-term.

For further information on The Future of Retirement: Why family matters, and previous reports in the series, visit