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An ageing population

People worldwide are living longer. Today most people can expect to live into their seventies and beyond. Every country in the world is experiencing growth in both the size and the proportion of older persons in the population.


Improvements in medical science mean that people are living longer. The recent 2021 Census highlighted that there are now 10.4 million people in the UK over the age of 65, a 52% increase over the preceding 30 years. This is not likely to slow anytime soon with the over-65 cohort expected to grow by a third again over the next 20 years.

Life expectancy isn’t consistent across the UK, with regional variations apparent; It is reckoned that a boy born in Blackpool can expect to live to 74 whereas a boy born in Westminster can expect to live to almost 85, a difference of more than 10 years.

According to Baroness Greengross OBE, Chief Executive of the International Longevity Centre, the number of UK citizens aged over 75 is expected to double to circa 10 million by 2040 and with 1.3 million people already receiving social care services in England alone, the demand for long‐term care is expected to increase significantly in coming decades.

Care in Old Age
However, whilst as a society we are living longer, we are often spending more time in later life in poorer health, resulting in the need for personal care. According to research from the Office of National Statistics, there are approximately 408,000 living in Care Homes across the UK.

As there are differences across society in life expectancy, there are also a large financial difference. Inevitably, some members of society are better placed than others to face the financial consequences of the changing demographics.

Recent research by Laing and Buisson showed that approximately 130,000 enter residential care each year, and just under half of these will be self-funding their long-term care.

The baby boomer generation accounts for a disproportionate percentage of private wealth, assisted by unprecedented increases in property and investment values.

Funding for Care
How families fund long-term care can vary depending on the types of assets they own and the income they receive. Some assets may be disregarded under certain circumstances. Typically, individuals fund their long-term care fees via their savings and investments, however, there are specialist insurance products designed to meet the shortfall in long term care fees.

An Immediate Needs Annuity could be considered to provide a guaranteed, pre-determined income for the rest of the individual’s life to meet the cost of care fees, at a known lump sum cost.

The level of wealth and income can also have an impact on how much financial assistance from the local authority you can receive towards the cost of long-term care. There are some state benefits which are non means tested and can be claimed based upon the individual’s personal care needs and medical circumstances.

Seeking Advice
HSBC have reported that whilst the average individual spends 19 years in retirement, the average UK pensioner’s savings will be depleted after just 7 years. It is an important reminder that when considering the best funding options available, individuals, and their families can benefit from seeking specialist financial advice from a suitability qualified and experienced adviser, such as those accredited by the Society of Later Life Advisers (SOLLA).

Both Ian Aldred and Ben Harrison are SOLLA accredited advisers and have the experience and skills to be able to advise individuals and their family in this complex area of financial planning advice.

Should you require specialist advice on funding long-term care fees, please contact Ian Aldred or Ben Harrison on 01771 821021 for a no obligation and free initial chat.

The above information is based on our current understanding of the HMRC tax and legislative position, which is subject to change. These are generic scenarios which may be overly simplified and may not apply to your specific circumstances.

This article should not be construed as a personalised recommendation and no action should be taken without further formal advice.

The rules surrounding pension protection are complex and any course of action will depend on your specific objectives and circumstances. For a detailed review of your arrangements, please contact our Financial Planning department.