RegulationAug 24 2016

Three in five people ‘unprepared’ for care costs

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Three in five people ‘unprepared’ for care costs

Three in five people have not factored the costs of care into their retirement plan, despite the fact 4 million people over the age of 65 have care needs.

A Citizens Advice survey of 500 people over the age of 55 found that, of the 39 per cent who had given some thought to care, just 16 per cent had actually put money aside to pay for it.

The remaining 23 per cent who had given care “some thought” were relying on a back-up plan, such as equity release or selling their home.

Of those who had no plan, the vast majority (60 per cent) said they had not thought about how they would fund care. Twenty-nine per cent said they had thought about it, but had no plan, while 10 per cent said they intended to rely on the help of others, such as their family or the government.

People in work were more likely to have no plan than those already in retirement - 66 per cent compared to 56 per cent.

“Care costs can be a heavy financial burden that many people are unprepared for,” commented Gillian Guy, chief executive of Citizens Advice.

“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.”

She said getting the right guidance was “key”, adding that local authorities could do more to inform people of their options.

Claire Walsh, a chartered financial planner with Aspect8, said people at the lower end of the income scale generally assume the state will pay for the care costs.

Of her own clients, she said: “I find they divide into two camps: those who want to put money aside to pay for care, and those who will do anything to avoid it, so they can pass their money on to their children.”

Ms Walsh said she always brings up care costs with her clients and most are willing to talk about it. However, those in the early stages of retirement tend to believe they can put off thinking about the issue until later.

She added that there were no longer specialist insurance products on the market, because insurers had taken the view that, as people were living so long, it had become too expensive.

james.fernyhough@ft.com