If you are approaching retirement age, you are likely considering how the next few decades may affect you financially.
Between drawing your pension, helping children and grandchildren as they pursue their own opportunities and maintaining financial stability, there is a lot to think about. In addition, one aspect of your later years you may have avoided thinking about is later-life care.
While it may seem a long way off, it is possible that, as you reach old age, you may need additional care support from professionals. This care can come in the form of at-home support, or you may decide to move to an elderly care facility for greater ease and comfort.
When assessing your financial circumstances in your later years, it is crucial to consider care as a potential cost. Despite the importance of this consideration, research from Canada Life reveals that 7 in 10 over-60s have not begun planning for later-life care.
Read on to find out why preparing for care later in life is essential and how you could gain peace of mind by working with your financial planner on this matter.
Later-life care requests are on the rise
Canada Life’s research shows that in recent years, requests for later-life care have increased significantly.
In 2019/20, approximately 1.9 million people requested care support from their local council – a 100,000 increase from 2015/16.
This may come as no surprise, as it is well established that Britain has an ageing population. According to the State of Ageing report, published by the Centre for Ageing Better, as of 2022, 19% of England’s population is over 65. In 10 years, this figure will have risen to 22%.
What is more, the Office for National Statistics (ONS) reports the life expectancy of the average UK citizen now sits at 79 for men and 82.9 for women.
All this could point to one crucial reality for you as a retiree: you may live longer than previous generations, so could be in greater need of care than those who came before you.
So, it is imperative to consider potential care costs when creating a financial plan for retirement. Luckily, your financial planner can help you factor in the need for care in later life.
Care can cost a significant sum every year
If your total assets are valued at more than £23,250 at the time you request care, you will pay for some or all of your care privately.
This can be a costly endeavour – Unbiased reports that residential care homes can cost around £32,000 a year, while part-time at-home care could be up to £16,000 a year.
In addition, the cost of care may rise in the coming years, with stronger demand for high-quality support increasing with the ageing population.
Fortunately, you may be able to fund your later-life care, or that of a loved one, with careful planning. Your pension, investment capital, properties, and other savings such as ISAs, can help pay for care if you need it down the road.
However, if you enter the later stages of your life unprepared, you could find you use up your savings too quickly, resulting in difficulty paying for care. So, it is vital that you begin thinking about potential care costs now, rather than later.
Budgeting for care early can reduce both financial and emotional strain
If you have so far avoided budgeting for later-life care, you are not alone. The study showed only 30% of over-65s had begun planning for care.
Of those who had not yet begun this process, 28% said they had put it off due to feeling emotionally overwhelmed. Plus, 25% said they had not started planning due to financial anxiety.
Indeed, it could be that, while you are aware that you may need care later in life, the financial stress and emotional ramifications have led you to avoid thinking about it. This is completely understandable – after all, pondering your own ageing process can be difficult, to say the least.
However, you could find that budgeting for the eventuality of later-life care could reduce your stress in the long term. Safe in the knowledge that you can afford care if you need it later on, you could live more peacefully in retirement.
Get in touch
Working with your financial planner can help you plan for later-life care, whether it is for yourself or a loved one. The earlier you begin to think about expenses that could affect your finances in years to come, the greater peace of mind you may feel as you enjoy your retirement.
For guidance on budgeting for care, email enquiries@bowmorefp.com or call us on 01275 462 469.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Bowmore Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.
