It's all about getting the balance right between planning ahead and living in the moment, if people want to make the most of their retirement, according to Tish Hanifan, founder and joint chairperson of the Society of Later Life Advisers.
She says: "Everyone’s priorities are different when it comes to leaving an inheritance or making lifetime gifts, but neither should leave the client without at minimum enough to live comfortably and to have a contingency fund which is easily accessible to cover unexpected costs.
"Ideally there should be pots of funds allocated to cover all the plans clients have made to enjoy their retirement, but without forgetting the need to consider the important matter of care funding at some point in the future."
Long-term care
While considering how clients can make the most of their lives and enjoy their retirement years, there is always a balance to be struck between saving to spend on fun things, and saving for unexpected events.
Among these, although there is a good argument that it should not be unexpected, is the spectre of long-term care.
Whether the person remains in their own home or needs specialist, round-the-clock care in a nursing home, this generally needs to be paid for by someone, and it is not, as one might expect, the taxpayer – most people face bills of some sort that the local authority cannot, or will not, pay.
Costs have spiralled in recent years; according to Age UK, the average care home cost is £600 a week or £800 for a nursing home, while the average cost of having care provided in your own home is between £650 to £1,600 a week, according to the NHS.
More often than not, these costs are passed on fully to the families or to the person receiving care, with little to no state support. The NHS website makes it clear:
A client will not be entitled to help with the cost of care from your local council if:
- They have savings worth more than £23,250.
- They own their own property (this only applies if they are moving into a care home).
Hanifan says most people not only underestimate the cost of care but also underestimate the number of years they may live in retirement.
She comments: "This combination of misunderstandings can have a serious detrimental impact on later life finances and ultimately on inheritance too. A good adviser will have talked this through with clients so that plans can be made and there are no unpleasant surprises."
According to Hanifan, one common mistake is to consider the costs of care as either/or - in other words, whether you need to go into care or not. "But even if you don’t have high-level needs that require full time residential care, many people will need some form of additional care within their home and these can be more costly than expected", she adds.
