News & Views

How much do you need to fund retirement and care?

How much do you need to fund retirement and care?

How much do you need to accumulate to fund a comfortable retirement and cover care costs in later life?

New research suggests a target figure of £470,000, with costs rising due to the recent bout of high price inflation.

The report from Quilter suggests that the target amount required for a comfortable retirement and adequate care provision has risen by £85,000 in the past five years.

Research from the Pension and Lifetime Savings Association (PLSA) as part of their Retirement Living Standards shows a single person needs to build up a pot of £360,000 in addition to their state pension provision to fund a comfortable retirement.

However, the typical cost of care in later life extends the amount needed for a comfortable retirement to £440,000, if residential care is required or £470,000 if you need nursing care.

These additional cost figures are based on calculations from Bupa.

Shaun Moore, tax and financial planning expert at Quilter, said:

“The current system of social care funding is widely acknowledged as being unsustainable, yet the social care can was once again kicked beyond the next general election in Hunt’s recent Autumn Statement. This causes huge uncertainty and will cost thousands for people entering the care system prior to 2025 and perhaps beyond that.

“The government promised in its 2019 manifesto that they will seek cross-party consensus on proposals for long term reform of social care, with the express aim of ensuring that nobody needs to sell their home to pay for the costs. But it has become a poisoned chalice for successive Prime Ministers due to the eye-watering cost of fundamental reform.

“Whatever solution is eventually in place, people will still need to think carefully about saving for their own care, as whatever is on offer is likely to be the bare minimum. Personal provision for social care will make up the vast majority of how someone pays for the care they need, and it certainly won’t be a small amount so people should think carefully about not only saving for retirement but also for social care.”

Preparing for Life’s Transitions

Forward wealth planning is important, to be prepared for life’s many transitions. One of life’s biggest transitions is retirement, and we would suggest the five years before your retirement and the five years after you retire are the most crucial. There’s a lot of change and upheaval at this time.

This is particularly true for someone who’s selling their business in order to retire. All of a sudden, they go from being a busy entrepreneur to someone who has a lot of time on their hands. It’s one of life’s transitions that need to be planned and prepared for carefully.

To visualise your financial future and feel less anxious about tomorrow, contact us to arrange an Exploration Call.