According to wealth manager Charles Stanley’s research, over a quarter (28%) of the Baby Boomer generation polled have not set aside money to cover any care they may require while still leaving a legacy for their family.
With residential care home expenditures of £56,000 ($74,008) per year, the study, which surveyed over 1,000 high net worth (HNW) individuals throughout the UK, finds that UK HNWs may be woefully unprepared for the costs of old age.
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A majority of Baby Boomer respondents (34%) agree that they will have to sell their property to raise the money necessary for their care.
The percentage of younger generations who believe they will rely on the sale of their house to pay for care costs climbed to 42% among Gen Z and Millennial respondents.
On the other hand, the study also revealed a significant generational divide in attitudes toward paying for long-term care.
Just 26% of Baby Boomers and 43% of Millennials in a survey agreed that their spouse will pay for any treatment they require.
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By GlobalDataIn a similar vein, Generation Z (43%) is far more likely than Baby Boomers (12%) to admit that they will depend on their children’s financial support in the future.
Many people intend to rely on government assistance with care expenditures, and this may be factored into their financial plans.
As a whole, 34% of HNWs are ready to use their wealth to qualify for state assistance so that they or their families do not have to pay for care out of pocket. While a quarter (25%) of Baby Boomers intend to do so, while somewhat more than two-fifths (41%) of Millennials agree as well.
Harry Bell, director of financial planning at Charles Stanley, stated: “From a financial planning perspective, our research raises the alarm bells for a few reasons. With an ageing population and a soaring demand for later-life care, families risk having to make serious compromises in order to pay for unexpected long-term care costs. Later-life care is a family matter, and our research makes it clear that difficult conversations are not happening nearly as much nor as early as they need to.
“Although we all hope for long-term independence in retirement, it’s vital to have the right plans in place to account for any eventuality. There is a delicate balancing act to be performed between gifting, spending, and leaving enough funds for care – something a Financial Planner is best placed to assist with. A discussion with a financial adviser can go a long way to giving an idea of how best to set aside capital for use in later-life and create contingency plans best suited for each individual.”
