Our latest guest blog comes from The Goodman Partnership, Chartered Financial Planners, in Tunbridge Wells Kent.
Advisers, Neil Whitaker and Andy Kirk, have attained the Later Life Adviser Accreditation and are proud to be full members of the Society of Later Life Advisers (SOLLA).
Here they explore the importance of planning early for later life and the options available to fund care costs.
Only a matter of a few years ago, somebody reaching 80 or 90 years of age seemed like an achievement, but now we regularly hear of 100th birthdays being celebrated. No one so far has lived longer than 122 – but Dutch researchers forecast that a woman will reach the milestone of 125 by the year 2070. In Britain alone, the number of people living to 100 is likely to grow from just over 14,500 in 2015 to 1.5 million by the end of the century.
If we typically retire at 65, then we could be looking at another 35 years on the planet, so the need to plan our finances to cover that period in our lives seems obvious. While we would all love to imagine a full and active old age, the likelihood is that many of us will end up needing some sort of care.
This would imply that having regular medical checks might be sensible and, at The Goodman Partnership, we would also recommend having a financial health check too. A financial mid-life MOT is currently being pushed by the Pensions and Financial Inclusion Minister, Guy Opperman, who said recently it is ‘something I am championing, I cannot stress enough that this is the way forward’.
Ideally, it would be sensible to have that ‘MOT’ in your early-50s, rather than leaving it until you are about to hit retirement. This gives a window of opportunity to address any obvious financial shortfalls.
At The Goodman Partnership, our financial health check will provide a detailed assessment of your existing pension plans, occupational scheme entitlements and other investments. Then we will ascertain the options available and report on their performance and effectiveness in the light of your objectives and requirements.
We are increasingly advising clients already in retirement about what steps they should take to prepare for the possibility of having to fund care. For many people, starting to receive care happens in stages. Initially, someone might require some practical help and company and social interaction to combat loneliness. They might also require assistance with a few daily tasks. This then often progresses to requiring a greater level of care. Ultimately, 24-hour live-in care or residential care might be required.
People are beginning to realise that they need to consider how they might be able to fund their care costs at whatever level and we are often asked to comment on how well placed someone might be to be able to afford care without the danger of running out of money. This exercise will also involve explaining what later life financial planning measures a client should take e.g. reviewing Wills, arranging Lasting Powers of Attorney, considering ownership of the property, general tax planning and making sure their capital is working well for them.
Understandably, many people come to us at the stage when they know that the need for care is more immediate. According to a recent survey of 1,000 people, carried out for the Care Quality Commission (CQC), choosing adult social care in England is one of the biggest sources of stress today, compared with other key life events. More than half (52%) of people surveyed cited choosing a care home and 31% cited choosing care at home in their top three most stressful life decisions.
At The Goodman Partnership, we know that the stress of finding the most appropriate and suitable care is often compounded by the funding aspect of care – how exactly can you pay for it? Will you need to sell your home? Will your Local Authority help you out? The UK care system is notoriously complicated and there’s much confusion around what financial assistance is and isn’t available.
We can explain in plain English the rules that are relevant to your own situation and ensure that you're receiving the benefits you're entitled to receive.
The main objective is to find a way to meet the cost of care fees so that you can always receive the care you require in the place of your choice without worrying about running out of money. Of course, this isn't always possible but there are certain steps that can be taken to make your capital go further.
Your financial arrangements can be organised in a variety of ways and often the best approach can be to use a combination of options. In many cases people express a desire to leave an inheritance to their loved ones as well as being able to pay for their care for the rest of their lives. We’ll always take this into account when considering the options and will ensure that the arrangements are simple to administer and tax efficient.
We’ll make you aware of the various options, explaining clearly how they work and help you to reach an informed decision that you feel happy with.