Our Tax Planning Consultant, Pam Mason, warns that care costs are higher than the average person’s pension pot.
Pam said: “Anyone planning to retire soon should be prepared to look at taking a flexible approach to their money as research has shown that the average amount of time someone spends in a care home has increased over the last decade from 829 days to 955 days – around two years and seven months.
“And figures revealed by the survey show this care costs an average of £75,000 per person which is higher than the average pension pot.
“What’s worse is that many people who retire get the chance to enjoy a number of years of active retirement before they go into care, which of course means they’ll be spending their pension savings too.”
Pam said 23% of women approached retirement with the intention of relying solely on their state pension, compared to 9% of men.
“The proposed cap on care costs in England has now been delayed until 2020, so many people may find they have to resort to selling their home to cover their care bills.
“Now that people are living longer – the average retirement is now 17 years long – the likelihood of needing residential or domiciliary care is increasing, so it’s definitely a topic that everyone needs to consider.”
Pam suggested it may be better to consider a more flexible retirement income solution, and urged people to look at all the options available before making a final decision.
“The best approach is to take some professional advice to see how you can make the most of your pension pots and decide on the best way to meet any potential care costs if you are faced with them in the future.
“With 38% of people resorting to using their savings to fund their care, it’s clear that it’s a dilemma that more and more people will have to resolve.”
Pam Mason, Tax Planning Consultant