As our society continues to live longer but not necessarily healthier lives, the need for long-term care at some stage of retirement is increasing.
New research from insurer Partnership has found that most over-65s have not spoken with their families about their potential need for long-term care and many are confused about their financial options.
Partnership found that 96% of over-65s have made no financial plans to pay for long-term care should they need it later in retirement.
73% have not had a conversation with their families on the subject of long-term care, or even thought about it.
As families are often closely involved in planning for long-term care when the need arises, these are quite worrying statistics.
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In addition to putting off these important conversations about planning for long-term care, Partnership found a lack of awareness about the financial products that can be used to fund care costs.
76% of adult children and 77% of over-65s were unaware of immediate care annuities.
These financial products can be used to secure a tax-free income for life to pay for care fees.
Whilst not always the right solution, it is important to consider an immediate care annuity as part of a care fees planning exercise. In many cases, they can offer an effective way to secure care fees and avoid the worry of running out of money in the future.
An immediate care annuity can also be used to ring fence an inheritance for children or grandchildren; something we are often told is an important feature for people entering residential care who are fearful they will run down the value of their estates.
Partnership commented:
“Care is very much on the agenda at the moment but this research highlights that not only have most people not made any plans or spoken to their families, they don’t know what their options are when it comes to paying for care.
“This is likely to be due to the fact that very few people want to consider the possibility of needing long-term care in later life.
“However, while there is a very low understanding of the products that can help people manage long-term care costs, some over-65s are clearly interested in understanding more about their options.
“This suggests that advisers should be speaking to their clients to see if they – or their parents – want further information on care planning.
“Taking time to consider their options now will pay off in the long run.”
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