Securing your future: Preparing financially for later life care

HELEN PERRIN: So in today's session, we'll talk you through some of the practical considerations when planning for care costs, how to factor the potential costs of care into your retirement and estate planning, and some of the options for insuring against longevity of care needs even when they may be needed in the future.

I'm Helen Perrin. I head up WTW's financial planning group in the UK. We're a team of regulated financial planners who provide education, guidance, and advice to support individuals with their financial planning.

I'm also joined by Sean Walsh today to help us explore this topic. So Shawn is an experienced financial planner at atomos, and he heads up atomos' Marlow and London offices. Welcome, Sean.

SEAN WALSH: Good morning or good afternoon now, Afternoon, everybody.

HELEN PERRIN: So many of you will already know, atomos is a financial planning and wealth management firm with which WTW has a strategic alliance. Our alliance with atomos gives us access to 60 experienced financial planners across the UK and provides atomos individual clients with access to our best investment ideas through the atomos portfolios managed by WTW's investments line of business.

And later in the session we'll talk you through how you can access advice from atomos if that's something that you're interested in finding out more about. But, however, if you're planning for your retirement, Sean and I believe it's really important to understand your aspirations if later life care were ever needed.

So would you want to focus on average care costs or the minimum potential care costs, or are you keen to explore the option of a more luxurious care home if that were ever needed. Or perhaps, like many of our clients, you're looking at some of these retirement living arrangements where it's less about care, at least initially, and more about making life easier with cooking, cleaning, and grounds maintenance delivered centrally, giving you more time to enjoy retirement.

So those types of arrangements are becoming increasingly popular with some of our older clients. So, for example, I have a client where the husband has suffered with forgetfulness for many years and has gradually deteriorated in that respect, whereas the wife is in great health.

They bought a retirement living home 10 years ago because she was concerned about having to deal with all life's chores and happening on her own. And she knew she might need some extra support for her husband in the future. So that support has now stepped up. But initially, they were just enjoying the company of the other residents and not having to worry about those day-to-day chores, which sounds quite nice.

And as well as that sort of quality of care and what it is you're looking for if that were ever needed, it's also important to think about how you would want to fund any future care needs to, would you want to allocate specific savings in case of potential costs for care, or would you be willing to downsize your property, for example, or take out equity on that property? So we'll explore some of those options in today's session.

The potential for later life care is also an important part of estate planning, so in terms of finding the right balance for you as an individual between gifting assets in your lifetime and potentially reducing the inheritance tax payable on your assets at the time of death but also providing for your own future and making sure that you've got the security that you need. And there is also care needed to ensure you don't fall foul of deliberate deprivation of assets rules if lifetime gifts are made when a care need exists or is anticipated. So some care is needed around that.

So whatever brings you here today, whether you're considering your own future and how to factor in the potential costs of care or you have loved ones with current or impending care needs, we hope you'll find today's session useful.

We are recording the session, so you will have been brought into the webinar with your cameras off and microphones muted. We do encourage your questions, and you can ask those using the Q&A function in the top middle of your screen. We will do our best to answer questions as we go, and we have a dedicated Q&A session at the end as well. And if you prefer to, you can choose to ask your questions anonymously by toggling to the Anonymous option in the Q&A.

So I'm going to start us off today with a look at the types of care which could be needed in later life and how long those care needs might typically last. We'll also take a look at the typical costs of different types of care, and then I'll hand over to Sean, who's going to help us look at how we can build provision for later life care into our retirement plans and consider how to balance that provision with other objectives such as immediate retirement spending and estate planning.

And then we'll finish today's session with a look at some of the specific options to fund later life care. So what assets might be available? What insurance options exist to protect against longevity of care needs?

And later life care may include medical care as well as social care either at home or in a residential care or nursing home. Medical care is, of course, provided free of charge by the NHS in the UK without the need for any means testing. However, for those of you who would prefer to insure for private health, there are policies available to provide ongoing private medical insurance well into retirement.

So as employees, many of us have private medical insurance through work, but that cover will typically ceasefire when we retire unless you make specific arrangements to continue that cover privately. So there are an increasing number of health insurance policies specifically targeting retirees, and those policies might include faster access to diagnostic tests and scans and day patient and inpatient treatment or outpatient cover, often available as an optional add-on as well.

And most policies include a 24/7 virtual GP service to say the need to wait for a GP appointment. So you can basically choose different features to tailor a policy to meet your requirements. But do ensure that you shop around if that is something you are considering and make sure you check the features carefully when comparing the costs between, say, continuing your workplace policy and taking out a new private medical insurance policy to check that, A, it's got all the features that you want and B, that you're comparing like for like when looking at costs.

For non-medical care, which might include help with activities of daily living such as washing, dressing, preparing meals and so on, that typically falls into two categories. So you've got domestic care, or care at home, and then you've got residential care in a nursing home or care home.

And we've included some statistics here on paid for care for over 65. Now, I should highlight that these statistics include paid care only. There are an estimated 5 million informal carers in England and Wales, which is expected to rise to 9 million by 2037.

So those informal carers are supporting loved ones with care needs on a daily basis, and they may be able to claim benefits such as carer's allowance if they are filling that care role. For a carer's allowance, you need to be working more than 35 hours and providing care, but are different benefits available, and some of those are covered in our useful resources follow up. But the numbers here are focusing on paid for care.

And with that social care around activities of daily living, if you can afford to pay for it, you will usually be expected to. Means testing varies across the UK, but in England, for example, if you have capital of more than 23,250, you'll usually be asked to pay for any social care needs in full. And most sources of income are also taken into account when assessing your ability to self-fund care costs.

At the highest level of care and the most expensive will be residential care, which is more common later in life. So that type of support in terms of residential care is required for around 5% of over 75s, increasing to 15% to 20% for over 85s. And as I say, that excludes those who are cared for at home by a loved one.

The costs of care at home will depend on the specific care need, whether it's daytime care only or of any nighttime care may be required and how many hours a week will be needed. And the costs of care at home and in residential care homes varies significantly by location and by the quality of care required.

So the highest cost of care will be in London and the Southeast, with lower costs in the Northeast of England and in Wales. And there's tools available to help you estimate costs by postcode and the type of care needed. So we will send a useful resource sheet around after today where you can look at the cost of care in your area.

We've also included here some statistics around typical lengths of stay in a residential care home to give you an idea of what the total cost could be over a lifetime. So that can be helpful when you're factoring in the potential costs of care into your retirement planning and into estate planning when, perhaps, including a buffer in your own finances for potential care costs before making lifetime gifts.

And I think that's probably a good time for me to hand over to Sean to talk you through how we can use cash flow planning tools to allow for potential future care costs while still considering your other priorities for retirement and getting that balance right for you as an individual.

SEAN WALSH: Thank you, Helen. So my bit today is going to talk through a overview of financial planning that, I guess, would cover pre-retirement, at retirement, and even later retirement, because as Helen was just saying, the cost of staying in care homes or having care at home has risen dramatically in the last 10 years. So it's good to review these things as you go along, but certainly before you retire, when you retire, and as you're in retirement.

So what we do in terms of financial planning, we look at both your short-term and long-term goals. And obviously, short-term goals would be around your spending and your retirement income that's required.

So the diagram on the right of your screen now is the output of a typical cash flow analysis that looks at, as it says there, your savings, investments, pensions, any benefits you might have, including state pension if you're still employed. And then we look at your needs, both basic needs, pre-retirement and in retirement.

And obviously, one of the things that we're talking about here is later retirement. It's one of those boxes that people open and quickly shut about later in life when you do need some of care. So what we do is we build in, and we look at the ever-increasing cost of some of this stuff where we have a double-edged sword here. One is about estate planning, and one is about your needs in your lifetime, which in your later life might be care. So that's the short-term and long-term access we look at.

So if you move on here to the next slide for me. Now, in terms of funding, as part of this process, we look at this on a very regular basis as we go through your life, but it's just a case of where would I get the funding required to pay for my care fees? An obvious one is on the left there, which is savings, investments. That's an easy one to really consider, where you build up assets through your life. You have savings, investments, ISAs, whatever, and obviously pension schemes and other investments.

Some people then look at their property because the consideration often is that as I go into care or need care, I would be able to sell my property. That, I guess, works typically in the second party to the marriage where they then want go into care later often. But if you've got care at home, you can't sell the property to fund your care. So then things like maybe equity release, as Helen alluded to earlier, might come into play.

The third option, which is available-- and often, there's a combination of all three here-- which is insuring for longevity. That's what's called an immediate needs annuity. Just like you can buy a pension scheme and annuity where you have lifetime income and immediate needs, annuity is something you would typically buy later in life that can provide you with higher levels of return obviously for often a lesser period.

So what we tend to do is we go through the cash flow analysis. We say, OK, what's available from savings, investments? What might be available from property, and is the insurance arrangements due now?

So as Helen said earlier, you might have members of your family who are later in life who are looking at this. So an immediate needs annuity might have a guarantee that's built in. That might work very well because obviously if you have anything in savings, investments, as we're seeing at the moment, there can be volatility in the market that could affect that in the short or the medium term. So it's best to consider all three options when putting the plan together.

So the cash flow analysis effectively helps us to try and anticipate care needs later in life but also with the other edge of it, which is where providing for your lifestyle but also then planning for any inheritances you might want to make. So it just balances those three needs off very well. Thanks, Helen.

HELEN PERRIN: Thank you. So we will send a recording of today's session in the next few days together with other Useful Resources sheet, which includes links to find out more about care options and tools such as care cost calculators as well as those funding options that Sean mentioned. It also include links to potential state benefits for carers and those needing care. So you can check any eligibility if you are providing care to somebody else or thinking about the future and what that might mean.

The sheet also flags how to put in place powers of attorney, which allows you to give permissions to somebody you trust to make health and financial decisions on your behalf in the event that you lost mental capacity to do so.

So powers of attorney can be really useful in the event of ill health but need to be put in place whilst an individual has the mental capacity to appoint an attorney. So I would encourage you all, regardless of age and health, to consider putting in place powers of attorney so that if they are ever needed in the future, they're there.

The Useful Resource sheet also includes some guidance around what you can do if you need to make decisions for somebody who hasn't got that power of attorney in place. So it's a more complex arrangement, but there are routes available to you that you can go through to help make decisions for loved ones if needed to.

As well as those Useful Resource sheets, we have a couple of options available for individual support. So just talking through those. The first is WTW's individual guidance service. So that's available to elect on Flexmart, flexible benefits platform as an anytime event. Guidance is delivered by WTW's regulated financial planning team. And it's basically a bit of a financial planning MOT. So we can cover whatever aspect of financial planning is important to you.

To attract the tax exemption, it needs to cover an element of retirement planning. But as we've hopefully highlighted today, planning for long-term care costs is an important part of that retirement planning. And we can also help think about how to meet the cost of immediate care needs for you or a loved one.

The guidance service follows a three-step process, so we ask you to complete a confidential questionnaire so we can better understand your circumstances and objectives and what you want to get from that guidance meeting. We then book you in for a video call to discuss your objectives in more detail and make suggestions as appropriate. And we follow up with a short, written summary and some actionable next steps and invite you to come back to ask any further questions or to get any further clarification.

The difference between guidance and regulated advice is that we can't provide you with a personal recommendation for a regulated product through guidance. So, for example, we can talk you through the potential costs of care and how to factor those into your retirement planning, but we wouldn't be able to complete that full cash flow analysis that Sean talked through or to provide advice on specific investments to fund potential future care costs. So there's no specific product recommendations there.

The cost of our guidance service is £500 , but it is tax deductible. So after tax savings, the cost to you would be somewhere between £265 and £360 over the year, depending on your tax position. And you'd usually pay monthly. So, for example, if you were to elect the benefit in April, payment would start in May, and we'd collect £62.50 per month for the next eight months to cover the £500 .

If you have any questions on that service, then do use the Q&A to ask those, or we do have a dedicated helpline and email number that you can call or email in to check whether that service might work for you or ask any questions around that. But as I say, for specific product recommendations or that more comprehensive financial planning advice, including full cash flow modeling, you would need to move to regulated financial advice. And Sean will talk us through how you can engage with advice from atomos if that is likely to better suit your needs.

SEAN WALSH: So what you have in front of you now is a QR code. If you want to go down that route, just click on the QR code, take a picture, and contact us through that. I'm available on the numbers that are on the screen behind me if you want to approach me directly. I'm based in the Southeast, but I can happily have a chat with you and recommend you through our-- if you're elsewhere in the country, to the appropriate people.

Our services, obviously, as Helen said, is regulated. There's no fee to interact with us. Initially, we would have an introductory call where we take you through our proposition, how it works, fees and charges, et cetera. And then if we were to move to a situation where you wanted advice, we'd fully disclose any fees or costs that would be payable, and you'd have to sign a document to agree to those fees before we started that process.

So initially, there's no cost at all. We're very happy just to have a chat with you and point you in the right direction if we're not the right people. So feel free to contact me or click on the QR code, and we'll take you from there.

HELEN PERRIN: Great. Thanks, Sean. Just looking if we've had any questions come in. Doesn't look like we have yet. So if you do have any questions around long-term care or any of the services we spoke about, then do pop those in the Q&A.

Whilst I give you the chance to do that, I'll just mention our next webinar, which will be on the 18th of June, when we'll be joined by Eleanor Ingilby, a portfolio manager at atomos. So it's been fairly uncertain period for markets over the last few months, and Ellie's going to talk us through what's happened in the markets over that time and also give her views on the second half of the year and what the portfolio management teams at atomos and WTW expect for the rest of 2026.

So do join us then if that's of interest, and you can register for that session using the link in the slide, which we'll share after today's session. And we'll also be sending out a reminder email next month for that session as well.

No questions have come in yet, so if there are no questions, thank you very much for attending today. We hope you found it useful.

I do need to share our limitations with reliance just to emphasise that the information shared today is for information only to give you some things to think about and shouldn't be relied on to make specific financial decisions without advice and the same limitations of reliance there from atomos in terms of trying to give you some food for thought today, but we can't give you advice in this group-based setting.

But as Sean said, if you do have something you want to talk about on an individual basis, you can book for a guidance session, or you can book for an intro session with atomos to work out if advice may be beneficial for you.

So we'll hang on for a few minutes just in case there are any questions, but otherwise, have a lovely rest of the day, and thank you for joining.

SEAN WALSH: Thank you for joining.

[MUSIC PLAYING]