According to the Alzheimer Society 850,000 people in the UK have dementia but with 1 in 6 people over the age of 80 living with dementia, this is predicted to rise to over 2 million by 2050 as the population ages
This week sees the start of Dementia Action Week, a campaign aimed to raise awareness and encourage communities to come together and help improve the lives of people living with dementia. While the effects of dementia can obviously be devastating for both the person living with dementia and the family and friends around them, the cost of care can also be overwhelming. Research by leading financial planning firm Tilney shows that the British population is completely failing to plan for this.
According to research undertaken for Tilney, 87% of people have not made any financial plans for themselves regarding potential care costs further down the line, and 88% have not done it for family members. What is more surprising is that 87% of those aged 55+ haven’t considered it for family members despite many having elderly parents.
There is also a lack of awareness over how much a care home will cost, with 20% believing it will be in the region of £1-2k a month, and another 20% believing it is £2-3k. Over a quarter (27%) admit they have no idea. In reality, according to a report by healthcare specialists Laing & Buisson, care homes costs typically range from £27,000 to £39,000 per year for a residential care home, or £35,000 to £55,000 per year if nursing is required. Homes in London and the South East can far exceed this.
The most common reason (26%) for not planning for care is that people simply do not like to think of themselves going into care. This feeling actually increases with age with 35% of people aged 55+ stating this as the main reason.
When asked how they feel care costs should be funded, there was little consensus with equal people believing an increase in general taxation, cutting spending elsewhere, a special insurance scheme for the over-50s and providing new tax incentives (eg Care ISAs) could be the way to go.
We never want to plan for the bad stuff because we never think it will happen to us
Commenting on the findings, Tilney’s head of estate planning, Ian Dyall, says: “It is not uncommon for people of any age to resist drawing up a Will purely because they do not want to think about their death, despite the issues it may cause for family members upon your death. This is exactly the same problem we are also seeing when it comes to long-term care planning.
“Our research shows that, the older people get, the less likely they are to face the potential consequences of old age. While this is completely understandable as few of us want to envisage ourselves needing a care home in the future, the lack of planning could leave a real funding gap with regard to care fees. In the case of dementia, if you have had the foresight to put in place a Lasting Power of Attorney, your dependents will have to make those difficult financial decisions on your behalf.
“Paying for the care of an increasingly elderly population is hugely expensive, but neither of the political parties has been brave enough to take the unpopular steps necessary to resolve it. Indeed the changes proposed by the Conservatives at the last General Election contributed to them losing their majority.
“Whatever the Government eventually comes up with it is unlikely to provide the standard of care that most of us would wish for, so it is vital to plan to pay for care ourselves and plan as early as possible. At the time people retire is a great time to take stock and answer some big questions. How much can I afford to spend in retirement? How will we fund care if necessary? Will I have an inheritance tax liability? Can I afford to pass money to my children and grandchildren? Should I use my pension to fund my retirement or reserve it as a method of passing on my money free of inheritance tax? Most people leave these decisions far too late.”
In this video – Difficult Conversations – Tilney’s Eliana Sydes discusses the financial impact of divorce, dementia and death on families:https://youtu.be/qA7TCH1L0eA