Planning for the UK’s care funding crisis

As we start to live longer and continue to drain resources, families without provision for long-term care often have to sell a house to cover the costs of looking after a parent in a care home. With the recent delay of the Green Paper on the future of adult social care, long-term care has again come to the forefront on the news. Unividual's Greg Harris, a qualified long-term care financial planner, answers some big questions that are currently hot topics in and around care for the elderly and how we plan for it.

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What’s all this talk about long term care?

As medical advances and healthcare improve we’re predicted to live longer and longer. Undeniably, this is cause for celebration. Some of us might aspire to receive a letter from the Queen one day but on the flip side there are serious concerns attached to longevity that flood the news. We are reminded, daily, of the rise of dementia, increased levels of cancer and the burden that caring for our elderly is placing on society. This reminds us that surviving past 80 or 90 isn’t something our parents, especially not our grandparents, planned for. Their expectations were to survive 10, maybe 15 years past retirement age. These days, you might well live another 30 years, possibly more, after you retire. Now, retirement is seen as another stage in life, the ability to have freedom to do what you want but company pension funds and council care services have reached saturation point.

Why we put off planning for our older selves

When we have these concerns in life we can worry, bury our head and hope we will never get old. Or we can do something about it and take charge of the things around us we can actually control. To do that isn’t easy though. Regardless of your age, in this situation you have to think ‘old’ whilst you still feel young. You have to plan for something that feels light-years ahead when really you want to keep spending or saving towards your goals and aspirations. With the rise of social media this has become harder as a society has evolved which fosters pressure to acquire “stuff” or “experiences” and display them to the world as a mark of success. We are constantly fighting a battle of balance between enjoying today and protecting our financial future from things we cannot control. The first stage is getting in this mindset of less worry, more action.

Why decision making is so important to freedom

Once you start a planning process you begin to realise that money can buy freedom. We see time and time again that people who make key decisions in the present are those who have more choices in the years to come. People check the boxes of planning for retirement, ensuring you can pay the bills if you become ill, making sure your financial legacy is in order but rarely do we think to plan for long term care. What you don’t see, until it is too late for yourself or your parents, is that if you don’t put in long-term care financial planning efforts early it effects the type of care that you can afford. Additionally, without the right plan, paying for care can dilapidate your assets, such as savings or property, you or your Mum or Dad have all worked so hard to build. Ultimately, we want to pass on as much of our accumulated wealth to our loved ones so they can continue to build the legacy. This could be entirely wiped out, for some people, in one generation if provisions are not put in place for care.

What will your parents think?

Medical advances and increasing health problems mean long-term care becomes just that: ‘long’. Previous generations often assume they will live as long as their parents. Many might not see the point in preparing for a future of old age but it is now a very different world we live in than what was experienced by their parents or grandparents. Traditional beliefs and values can at times prevent the ability to explore options and ideas. There will be times when we discuss things with our parents and they think they know best. This is why spending time as a family with a professional financial planner to carefully consider how you manage your assets and finances collectively will ensure the family’s financial freedom and legacy is nurtured and protected. This approach to financial planning has made Unividual well-versed in family conversation and even if at times we become a mediator, inevitably families that work together are the ones that grow their wealth.

What’s the point, you can’t predict the future?

You would have to be a special kind of person to enjoy making “grown-up” decisions. Our brains often tell us that no one can predict the future. This is where financial planning shines at its best though, good financial planners focus on scenario planning. According to The Aegon ‘Retirement Readiness’ Survey, 2019, only 48% of people have factored healthcare costs into their retirement savings. They also found that a considerable amount of people (39%) retired sooner than they planned and the main reason was for ill-health (34%). With a long-term care financial adviser you can look at various different situations that could occur and prepare for them. We spend our lifetime dreaming about our future. We just need to focus some of that in to picturing life post-70 or 80 years old and we can help with that.

Watch our Video

If reading this has ignited a spark of action and you would like to draw up an idea of what your future in long-term care might look like all you need to do is just pick up the phone and call me. We can start off by thinking about the support services you would like to be able to afford, consider how you might use your current assets and finances to make that picture a future reality. Then finally look at how that fits in with your overall financial plan. In both name and approach, Unividual is passionate about tailoring financial advice to each client’s own set of circumstances and ambitions. Just like there’s no generic way to experience old age, to us every client is unique. It’s how we help you imagine your ideal future and what ways we can best achieve it.

For more useful tips for planning for care in later life, watch our long-term care video or simply get in touch with me on 0330 353 0150 or greg@unividual.co.uk

Date of article: 31st July 2019

Author: Greg Harris, Chartered Financial Planner

Editor: Cherie-Anne Baxter, Chartered Marketer