Beware! For those people relying on inheritance money to fund their retirement, keep wary eye on care fees!

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Beware! For those people relying on inheritance money to fund their retirement, keep wary eye on care fees!

Lifetime news

Posted on: 06/09/2013

A quarter of Britons are relying on inheritance to fund their retirement – but new research has shown that around one million homes have been sold in recent years purely to pay for care fees.

The research, carried out by NFU Mutual, revealed one in seven (15%) people in the country are clinging to the hope of inheriting property or cash from their parents to fund their own retirement.

But three in every four people whose parents go into care now may have to face up to the sad fact that their inheritance may well be eaten up by the associated costs.

Over a million homes have been sold in the last five years to pay for long-term care costs – and more than two million elderly people have had to use their savings to fund care.

NFU Mutual personal finance specialist Sean McCann said: “Younger generations could be in for a long wait if they’re banking on an inheritance to fund their retirement. People should be making their own retirement plans rather than factoring in property and wealth that could be whittled away by the cost of care and inheritance tax.”

The findings highlighted poor understanding regarding the cost of care and a lack of inheritance tax planning.

The research showed that a third of Britons (31%) said their parents made no plans for the impact of old age care on their estates, while a similar number (32%) admitted they have failed to factor this ever increasing cost into their own planning.

And the gap in retirement provision is set to worsen as councils tighten budgets for elderly residential care.

Freedom of Information data collected by NFU Mutual shows more than half of councils (53%) have slashed their care budgets over the last five years or reduced actual spending, suggesting a tightening of purse strings when it comes to old age care.

McCann concluded: “There’s no magic bullet to avoid care home fees during your lifetime but, with careful planning, you could protect your share of the family’s wealth after you die.

“Anyone who wants to see their life savings and the family home handed down to children and grandchildren needs to take professional advice to make sure they’re not paying more tax than they need to.”

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