Retirees seeking a comfortable retirement and enough money for long term/social care will need to build up a pension pot worth £470,000, new analysis from Quilter has shown.
Under the Pensions and Lifetime Savings Association, the definition of what constitutes a comfortable retirement would require savings of around £360,000 in addition to the state pension. However, the average length of care people need is a little over two years, according to Bupa, and if that cost is added, it increases to nearly £440,000 for residential care and £470,000 for nursing care.
While the government previously unveiled plans to introduce a new £86,000 care cap on costs in October 2023, Chancellor Jeremy Hunt said the change will not come into force until October 2025.
The wealth manager said the sharp rise in cost of living means that someone needing to self-fund a comfortable retirement as well as two years of nursing care needs an extra £85,000 compared to five years ago.
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.”
Moore said that whatever solution is put in place, individuals will still need to carefully plan for potential care costs.
Moore added: “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.”
