Millions of pensioners are funding long term care costs out of their retirement savings or by selling their family homes.
Table of contents
Most families who have seen an elderly relative go into long term care lose most of their inheritance to fees, according to research by financial firm NFU Mutual.
The firm says this will come as a shock to the 155 of families who are relying on an inheritance to ease their own financial woes.
The research also showed that one of the main drivers for increasing care costs over the past five years has been councils shifting the expense of long term care for the elderly out of the public purse and to those directly benefitting from the care.
The firm’s figures reveal 2 million elderly people are funding care costs from their retirement savings, like pensions, cash and investments, while 25% of those in care have sold their homes to raise money to pay for their living costs.
Million homes sold
The study also showed more than a million homes have been sold in the past five years to supplement care costs.
NFU Mutual’s Sean McCann said: “Families expecting an inheritance to fund their own retirement could be in for a shock because often, if they have elderly relatives in care, there’s little or nothing left in the pot once their care fees and any inheritance tax are paid.
“These people should be making their own financial plans for retirement rather than relying on an event that might never materialise.”
McCann claims many families are naive about end-of-life financial planning and taxes.
A third of young families confessed their parents have no plans for funding long term care and the same number have made no provision for care in their later years themselves.
IHT planning
NFU Mutual fears the problem will worsen as a study of long term care spending by local councils has revealed budgets for the elderly are shrinking.
More than half the councils (53%) said spending on care for the elderly had been cut during the past five years.
“Anyone who wants to safeguard their home and retirement savings for the benefit of their families or loved ones needs to take financial advice before the time comes to pay care costs,” said McCann.
“Every case is different and it’s hard to protect family wealth against care homes fees, but planning for any inheritance tax bill is something that is more straightforward.”
Related Articles, Guides and Insights
Below is a list of some related articles, guides and insights that you may find of interest.
Questions or Comments?
We love to get feedback from our readers. So, after reading this article, if you have any questions or want to make comments, send us a message on this site or our social media?