Adviser Points of View (29/04/2019) – Analysis conducted by pensions and investment company Aegon has found that nearly four in ten baby boomers have expressed fears that future care costs will hold them back from spending more once they stop working.
The data, which also found that three in ten are now ensuring they have enough money for care costs, comes as the final members of the baby boomer generation turn 55 this year. This is the age that they can access their pension.
Steven Cameron, pensions director at Aegon, said: “The research shows that a large proportion of baby boomers are concerned about funding their future care costs, and with good reason. The cost of formal care can be immense and retirees often face selling their house and rapidly depleting their lifetime savings to pay for this, extinguishing any plans to pass on an inheritance to future generations.
“What makes it worse is that until the Government sets out clearly how much individuals will in future be expected to contribute, it’s almost impossible to plan ahead. Fear of being unable to ‘pay their way’ means some are spending less than they can afford to, stopping them fully enjoying their earlier retirement years.”
Previously, the government announced it was to publish a Green Paper on a new approach to social care funding in its March 2017 Budget.
However, this has been repeatedly delayed. Social care funding did receive a mention in the Chancellor’s 2019 Spring Statement but only to say it will be considered as part of a comprehensive Summer spending review.
Ricky Chan, director and chartered financial planner at IFS Wealth & Pensions, said: “I’m a little surprised by numbers as high as those. Generally speaking, I find that those at-retirement understand the potential long-term care costs but are more concerned about having enough money to enjoy a good retirement lifestyle and achieve their aspirations, such as travelling, pursuing hobbies and passions. And so they should be because the reality is that most do not have enough for both a good retirement and potential long-term care costs -which they may never need – fortunately for those baby boomers who have benefitted from appreciating property prices in the past few decades are ‘asset-rich’ so have the option to downsize and sell in future to cover these costs.
“Advisers delivering good financial planning will naturally attract more baby boomers from referrals as they can help clients account for future care costs and make better financial decisions today, including making sufficient provisions so they don’t need to cut-back or can afford to leave a legacy too.”
Full article link: https://www.adviserpointsofview.com/2019/04/care-costs-holding-back-baby-boomers-in-retirement/
