You may have already given considerable thought to several aspects of your retirement. This could include where you plan to travel, how you might renovate your home, or how you want to spend more time with loved ones.
One crucial area you might not have addressed, however, is planning for later-life care.
This is somewhat understandable, as it isn’t the most positive topic to consider. You may prefer to focus on some of the more exciting and uplifting aspects of the next phase of your life.
However, the reality is that care needs could become one of the most significant challenges you face later in life, both emotionally and financially.
Despite this, it seems that many in the UK aren’t giving this much thought. Research reported by SME Today found that only 17% of UK workers have fully considered going into care in their retirement plans.
Meanwhile, 40% have only given it a passing thought, while 31% haven’t considered it at all.
Combined with delayed reforms and a rapidly ageing population, this lack of preparation is contributing to a “retirement care crisis”.
Continue reading to discover what this entails and why it’s so essential to incorporate later-life care into your long-term financial plan.
There are several factors contributing to the retirement care crisis
Several different factors are coming together to create pressures on care in the UK.
Firstly, the social care system itself has long been under scrutiny. The government has recently established an independent commission to introduce reforms to adult social care in the country.
According to FTAdviser, the health secretary, Wes Streeting, said the commission would look at what the social care system should look like to meet the needs of older and disabled people.
He also stated that he would “like to see people protected from the catastrophic costs of upfront care that sees people forced to sell their homes and move out”.
Yet, the government has since stated that long-term changes are unlikely to be delivered before 2028.
While these reforms may only be a few years away at most, relying solely on them could leave you or your loved ones vulnerable if you need support before then, or if the reforms fail to address the issue.
Regarding the “catastrophic costs of upfront care”, this has also significantly contributed to the retirement care crisis.
Carehome.co.uk states that the average weekly cost of care for self-funders in 2025/26 is:
- £1,266 for residential care, translating to £65,832 a year
- £1,529 for nursing care, equivalent to £79,508 a year
These are staggering figures, and with life expectancies rising, you may need to cover these costs for potential decades.
Indeed, the Office for National Statistics (ONS) reports that men aged 65 in 2020 in the UK could expect to live 19.8 more years, or 22.5 years for women. This is expected to rise to 21.8 years and 24.4 years, respectively, by 2045.
Not all those years will necessarily be spent in good health, either.
More statistics from the ONS suggest that, from 2021 to 2023, men in England could expect to spend 61.5 years of their lives in good health, or 61.9 years for women. This means that, on average, you could spend roughly 20 years in poor health.
If you fail to account for this in your retirement planning, you may risk depleting your retirement funds prematurely. This is especially the case if you draw significant amounts from your pension early on to fund your desired lifestyle.
Without a careful and well-thought-out approach, you may find that you face a significant shortfall later in life when you’re at your most vulnerable.
It’s crucial to incorporate later-life care into your retirement plan today
Due to the trends mentioned above, it’s clear why taking action now is so vital. Even if you haven’t already given later-life care much thought until now, it’s never too late to start.
One of the first prudent steps you can take is to review your anticipated retirement budget, remembering that your income needs will likely fluctuate over time.
In the early stages, you might spend more on leisure, travel, or home improvements, while later years may see rising healthcare or support costs.
After assessing the cost of your desired lifestyle, you can explore how to allocate part of your disposable income or accumulated wealth toward potential care expenses.
Working with a financial planner could be beneficial in this situation.
Indeed, we could use sophisticated cashflow modelling software to plot your income and expenditure in various scenarios to check whether you have sufficient wealth accumulated to meet goals while also covering potential care costs.
We can also help you devise a contingency plan for your fund if care isn’t required. This is particularly relevant, given that from April 2027, pensions will no longer be excluded from your estate for Inheritance Tax purposes.
To find out more, please use our search function to locate your nearest Verso office. For Verso Investment Management enquiries, contact us at info@versoim.com or call 020 7380 3300.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate cashflow modelling or tax planning.