With a person’s increasing ability to improve their long-term survival prospects, there comes a new set of challenges – how to plan your finances long into retirement.

A little over 100 years ago, life expectancy of an average male was only 48.5 years, and a female was 52.5 years. Medical advancements have virtually wiped out many fatal diseases such as TB, Diphtheria, and Polio. Improved conditions in the workplace and better housing have also improved longevity, meaning that a 50-year-old male today would have an average life expectancy of 84 years and a female of the same age would expect to live to age 87 years. 

Living longer increases the risk of disablement so we must ensure we have sufficient financial provisions to cover long term care. The best time to plan for your old age is normally from the age of 45 to 60. This is the time when perhaps the children have left home, and income is potentially at its highest. 

After taking care of basic priorities, such as life cover, income replacement on ill health and pension planning, it is now wise to turn our attentions to long term health care. 

Costs of Care:

Under current legislation, anyone who has savings or property worth over £23,250.00 is unable to obtain government help to pay for fees in a nursing or residential home. At today’s prices you could expect to spend over £33,500.00 per year to stay in a residential home and over £42,500.00 per year in a nursing home. Care in your own home can also prove to be very expensive.

New Social Care Plan Legislation Announced 7th September 2021:

The government confirmed that from April 2022 the maximum that any person in England would be expected to pay for social care costs would be capped at £86,000.00 over their lifetime. Although welcome news, on the face of it, there are potentially other underlying costs which will require further clarification. The £86,000.00 cap is based on care costs; however, it is unclear whether this includes the cost of accommodation and food. If these are excluded from the cap the true cost of long-term care may well be significantly higher than first thought.

Potential Solution:

Historically insurance was used to protect a person’s estate from the cost of long-term care, however in recent times these have been largely withdrawn from the marketplace, meaning that a person’s only choice has been to spend their life savings until the point that the government provides help.

The positive news is that there is a general expectation that over the coming months a number of Insurance policies will be developed to help towards mitigating these costs, therefore enabling advanced planning to become a possibility once again.

If you would like to learn more about this subject or require Independent Financial Advice from our local, experienced, and friendly team, please feel free to contact us on 01788 57 11 22.

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor. 

PJL Financial Services Limited are authorised and regulated by the Financial Conduct Authority. 

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