New Survey Suggests Burying Head In Sand Still Trumps Prudent Planning For Later Life
Adults putting off the hard questions surrounding growing old and care in later life risk dreams of an inheritance for their children being shattered and family left to count the cost of care home fee realities instead, according to a new survey.
YouGov research commissioned by law firm Irwin Mitchell polled over 2000 of the British public on attitudes and plans for care home fees in the UK, revealing at least 31% of parents think that elderly care home fees generally come from sources other than the individual’s estate - yet over half (65%) aren’t currently saving for any potential future fees and don’t plan to, and just 9% are currently saving.
The results showed a pertinent correlation between those with children in the household and those without, revealing the more children a person had the less likely they were to think that an individual’s funding for a care home came from their estate. Those with no children were more likely to think this, at 59%, whereas this drops significantly to 41% to those with three or more children.
Expert Opinion“The results are interesting in that they reflect a gap between the intention of saving for care – taking funds from savings was the most popular choice after the traditional avenues of paying from the estate and government funding – versus the reality of it, considering a big majority the survey said they had no plans to save for care home fees.
“This reflects a concerning attitude towards putting off the hard questions about growing old, when planning ahead now could be the difference between having enough to keep the family home for the children and grandchildren to inherit – otherwise the inheritance is the first thing to go.
“The ageing population crisis is with us now and will only get worse if families do not consider their options for the future when they’re younger to give them enough time to save.” Kelly Greig - Partner
Children also face a financial double whammy with no traditional inheritance, yet expected by some parents to find themselves contributing to care home fees.
In the survey out of those who thought care home fees were paid for by other family members, it was the younger generations aged 18-34 who selected this option over older respondents (44% vs 31% of adults 35+) – suggesting an expectation perpetuated in recent years to inherit, given increased house prices and a more challenging financial landscape for young people in the last two decades.
The findings come against a backdrop of dramatic rises in care home fees and a next generation set to be worse off than their parents. If traditional ways of passing on assets break down, ‘wealth cascading down the generations’ may turn out to be less than a trickle without more of us having plans for later life.
In 2018 the Resolution Foundation found that UK millennials had suffered the second-biggest role reversal in their finances aside from Greek citizens, with British people born in 1980 earning 13% less than those born in 1970 at the same age. It also found home ownership rates were half of the 60% of baby boomers who owned a home in their late twenties.
In the last two decades care home fees have also risen, going from an average of £445 per week for residential care with nursing in 1997 to £845 per week in 2017 – making some care home contracts tens of thousands of pounds for just one year.
The government’s long-awaited green paper, first announced in 2017 and detailing reforms to social care, remains elusive and with no publication date in sight. Experts at Irwin Mitchell argue the lack of clarity is concerning.
Kelly continued: “It’s likely there are conversations happening between parents and their children over expectations on what they’re going to inherit, or even an unspoken understanding between the two that money will be in the pot for a generation which is going to struggle more financially than older generations had to.
“The logic of this thinking makes sense – for many house prices have skyrocketed up, therefore significantly increasing the size of their estate and leaving more money for their heirs to inherit. The survey results certainly lean towards this way of thinking based on how many children are involved.
“Care home fees undoubtedly throw a spanner in the works that many people simply aren’t considering and burying our heads in the sand about it will not help. We strongly advise for everyone to have a plan for care home fees in place, and to speak with a wealth manager if they are concerned – even if they don’t consider themselves to be ‘wealthy’, advice from a professional will be invaluable.”
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