Concerns about having enough money to pay for care in later life is holding back baby boomers in retirement, research suggests. (Baby boomers are those born between 1946 and 1964. They make up a substantial proportion of the world’s population.)
The survey by Aegon found 39% of baby boomers said concerns over future care costs will hold them back from spending more in retirement and 30% said ensuring they have enough money for care costs is important to them.
Most individuals are required to pay for all care costs unless their assets and income fall below a threshold, currently between £23,250 and £28,000 depending on where you live in the UK, although different rules apply in Scotland.
Latest figures show the average cost of staying in a residential care home in the UK is £32,344 per year and a typical hour rate for home care is around £20.
The government announced it was to publish a Green Paper on a new approach to social care funding in its March 2017 Budget, however this has been repeatedly delayed.
Social care funding did receive a mention in the Chancellor’s 2019 Spring Statement but only to say it will be considered as part of a comprehensive summer spending review.
Steven Cameron, pensions director at Aegon, said the cost of formal care can be immense and retirees often face selling their house and rapidly depleting their lifetime savings to pay for this, extinguishing any plans to pass on an inheritance to future generations.
“What makes it worse is that until the government sets out clearly how much individuals will in future be expected to contribute, it’s almost impossible to plan ahead. Fear of being unable to ‘pay their way’ means some are spending less than they can afford to, stopping them fully enjoying their earlier retirement years,” he added.
Cameron pointed out that with more people living into their 90s and beyond, many baby boomers thinking ahead to their own care needs will have elderly parents to care for and may face having to opt to work part time or give up work entirely.
If you’d like to talk about your financial planning in retirement and how to make provision for possible care / residential home costs, please contact your Brunsdon Financial Adviser now.
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