Only 16% of pensioners setting aside money for care
Britons are failing to prepare adequately for the cost of care and ill health in retirement, providers are warning.
Research published by Prudential today shows that of those planning to retire this year, just 20% have set aside money for any care, a figure which falls to 16% among over 65s.
Furthermore, less than half (45%) of those retiring this year have planned for the fact they may need more income in retirement as they get older.
Prudential says that despite consumers’ relaxed attitudes, funding long-term care has never been more important because while life expectancy is increasing, healthy life expectancy is actually flat lining, meaning that with people working for longer, they are enjoying fewer healthy years in retirement.
Vince Smith-Hughes, retirement expert at Prudential, said: “People retiring this year realise that living longer may mean they will need a higher income as they get older, but few of them have made the connection between the risk of ill-health, and needing money to pay for healthcare.”
He added: “Making financial provision for the possibility of ill-health in retirement should be an integral part of the retirement planning process.”
Also published this week is a survey of over 45s from Partnership showing that just 7% would think to turn to a financial adviser for advice on care home fees.
When asked where they would go for advice on how to fund the cost of residential long-term care, 46% said the Citizens Advice Bureau, 44% said their local council or a social worker, 27% said their GP and 24% said their family.
Less popular options were a charity, cited by 13% of respondents, a solicitor, chosen by 11%, an IFA, selected by 7%, and a bank, chosen by 4%.
Chris Horlick, managing director for care at Partnership, said it is concerning that so few would turn to IFAs for advice, noting that in 2009 only 7,000 of the 53,000 self-payers who entered residential care received advice from a qualified IFA.
He said: “In the absence of appropriate financial advice self-payers – who constitute 41% of all people in residential care – may purchase the wrong financial product to cover the costs of care fees or even not purchase one at all.
“It is hardly surprising that it is estimated as many as 25% of self-funders deplete their funds and fall back on the state.”
Horlick added that financial advisers should be actively engaged in the provision of care fees planning, as with the elderly population growing quickly, there is sure to be a rising demand for high quality and appropriate financial advice.