Research from annuities giant Partnership earlier this year revealed that the majority of people expect to live around 17 years after retirement at age 65, the reality is that two-thirds will live for 20 years or more. At the same time, statistics from the ABI show that the average sum invested in larger retirement pots is just £59,500.
These numbers signal a real danger as retirement savings fail to keep pace with life expectancies. With current UK average care home fees standing at £38,000 the typical retirement pot (assuming no other sources of finance) wouldn’t even pay for two years of care. And with the public sector purse shrinking it is unlikely that the number of State-funded places will be able to bridge the need.
The Care Act places a duty on the Local Authority to arrange care and support for those with an eligible need with at least one option available and affordable within a person’s personal budget. But with numbers like these – is it realistic to think that over-stretched councils will be able to do this?
This “expectation gap” between perceived and actual life expectancies, care costs and average retirement savings and the ability of the public sector to provide choice and funding, presents a potential crisis in long term care. People need to approach retirement with open eyes and plan better for what lies ahead.
The ONS statistics show that you and your loved ones may well be in retirement longer than you were in education. When faced with an average fees bill of £286,000 for 14 years of private education it’s no wonder that many parents need scrimp, save and plan carefully to afford this. In contrast, 14 years in an average care home would mean a bill of over £500k yet, just 6% of people seek professional advice before entering long term care.
The truth is that long term care is costly and requires better planning and honest upfront conversations within families at or near retirement rather than when long term care is an imminent issue. At My Care Consultant, we specialise in helping clients navigate the complex maze that is the UK care system. This means finding the right care environment for an individual to begin with and then exploring what benefits or support they might be entitled to, as well as signposting legal or financial advice. We then guide them through the financial product options that are available to them, so that their wealth is better protected when paying for long term care. Simply by planning ahead and mapping your expectations out early, many customers can have the retirement they deserve after a long working life and the comfort of knowing that they can enjoy quality of life as well as longevity in a first class care environment. However, much like a top tier education this comes with a price tag and only with appreciating and considering this with the help of specialist advice can it be achievable by many.