Three in five people who have taken money out of their retirement savings under the pension freedoms have not planned for how they would pay for future care costs, according to a study commissioned by Citizens Advice.
Based on a survey of 501 people aged 55 and over who have accessed their pension since the reforms were introduced in April 2015, the charity finds just 16% have budgeted for care expenditures they may face as they grow older.
A further 23% have given some thought to this and have a backup plan, such as equity release or selling their home.
Of those who do not have a plan, the study finds 60% have not thought how they would pay for future care needs.
Nearly one in three have thought about the issue but have no plan about how to address it.
The remaining 10% would rely on others such as family or the government.
The survey also finds those without a plan are more likely to still be in work, with two thirds (66%) of people employed full-time lacking a plan, compared to just over half (56%) of those who have already retired.
Citizens Advice chief executive Gillian Guy said: "It is unsurprising that many people in their fifties are not thinking about how they will pay for care costs when the need for this could be 10, 20 or even 30 years away.
"But this issue does need some attention, otherwise people risk dipping into their pension now only to find they need some of the money later."
The charity says currently around four million older people, nearly half of those aged over 65 in England, have care needs. Costs can include paying someone to help at home or moving into a residential or nursing home.
Citing research by Prestige Nursing + Care, Citizens Advice adds that the charge is changeable, with the annual cost of a care home increased by £1,536 between 2015 and 2016.
Citizens Advice argues many people are unsure how the funding system works. It believes local authorities could provide clarity by offering online and face-to-face services that help people work out how they can pay for future care costs.
The charity is also calling for an option for people to be referred to these services when making financial choices, like taking money out of their pension savings.
"Getting the right guidance is key in helping people think about and plan how they will fund their retirement - including costs which are more tricky to consider, such as care fees," said Guy.
"There is also an opportunity for local authorities to help people plan ahead for future care costs, by providing clear information about how funding for care works and how much it costs."
Earlier this month the International Longevity Centre - UK called for better understanding of how to improve pensioners’ financial skills.