There is a consistent tendency for people to underestimate how long they think they (and others) will live. They will generally start with how long their parents lived and use that as a guide. But their life expectancy and that of their generation could be very different from that of their parents.
With people living longer, many more are now likely to need some form of care in later life, risking costs that rapidly eat into their accumulated wealth. And with today’s flexible access to pension pots, over spending in early retirement could also mean that little other than property is left for funding care in the longer-term.
Living longer than planned for can result in reserves of accumulated wealth becoming exhausted prematurely. If these reserves are paying for care, that might mean moving to a cheaper care home, taking a cheaper room in a care home or even falling back on local authority funded care. None of these are particularly desirable outcomes as elderly people do not tend to take change well. It can be very disruptive and confusing, especially for someone with failing physical or mental health.
According to recent surveys, care is not high on the agenda of most retirees. Yet the longer planning for it is left, the more complex later life advice becomes. Family members and Powers of Attorney are likely to be involved and – if appropriate arrangements haven’t been made by the time capacity is lost – the courts may need to be involved too.
Source: Threesixty LLP Online 2019