Property wealth is growing in importance for funding care in later life as faith in savings and pension income falls, a new report ‘Tackling the Care Question’ from the UK’s leading over-55s specialist adviser Key shows.
Key’s second report into care funding has highlighted a major shift in attitudes to using property wealth to fund care - around a third (29%) of over-55s plan to use their homes now compared with just 19% a year ago.
That is reflected in a similar downturn in confidence in being able to fund care from savings and investments or pension incomes partly driven by historic lows in interest rates and continuing stock market volatility. Just 34% of over-55s (44% - 2019) believe their savings and investments will help fund care while 30% (40% - 2019) say they will use pension income.
Key’s study shows over-55s overwhelmingly want to receive care in their own property – with three-quarters (75%) planning to either stay in their current home or move to a more manageable property. Just 4% would prefer to move to a care home.
Key’s research shows a quarter of people either don’t know how they would meet their care costs (15%) or wouldn’t be able to meet the costs (10%). One in 12 (8%) would have to sell any valuables they have to fund their care in 2020 – up three percentage points compared to 2019 (5%).
Care funding squeeze
Key’s report asked councils in England, Wales, and Scotland via FOI what proportion of those who needed long term care, they paid for in full and what proportion received some financial assistance. Data collected suggested that there could be as much as a 10% YOY drop in the number of people receiving some form of financial support for care between 2018/17 (568,867) and 2019/20 (512,816). Of the more than 205 bodies that responded, 18% were unable or unwilling to provide the requested data1.
Will Hale, CEO at Key, said: “When you speak to people, you find that the vast majority are keen to receive care and support in the comfort of their own home but struggle to know how, or how best, they might meet these costs. With the recent economic turmoil, confidence in savings and pension income has fallen while more people are looking to the value tied up in bricks and mortar to finance care. Getting good advice and understanding what resources you have to draw on is important – and making sure you factor these potential costs into your retirement planning is vital.
”At the same time as councils are under pressure, over-55s are waking up to the reality that they may well need to pay for all or some of their care in later life. This has created the perfect storm and it is vital that the Government focuses on setting out clear plans for reaching a cross-party consensus on social care, and consider long-term reform and funding of the care system. “
Percentage of people who would use different means to fund their care
|MEANS OF MEETING THE COST OF CARE||Percentage of people planning to do this in 2020||Percentage of people who planned to do this in 2019||Change – percentage points|
|savings and investments||34%||44%||-10%|
|some / all the value of my home||29%||19%||+10%|
|sell any valuable items I have||8%||5%||+3%|
|look to my family for support||5%||2%||+3%|
|Council would need to pay||12%||8%||+4%|
|Unable to meet costs||10%||5%||+5%|