What are the chances you’ll need long-term care one day?
The following might not be a question that many of us want to ask – or know the answer to – but it’s an important one, as it can have major implications for you, your loved ones and your finances:
What are the chances that you’ll need some form of long-term care before the end of your life?
It’s hard to find any definitive data that answers this precisely, so to a large extent, it depends on which set of figures you believe are most credible.
The most pessimistic estimate is stated in recent UK government guidance. It claims that “around three out of four adults over the age of 65 will face care costs in their lifetime”1 – although the data on which this statement is based has not been made clear.
This figure might seem surprisingly high to many. And what makes it even more potentially concerning is that this refers only to those who will need to pay for care – and doesn’t include those who will need care but will be looked after by relatives, friends or volunteers.
If this sounds unbelievably high, a potentially more realistic figure could be based on calculations released by the government last year. These estimate that in 2018 (the latest year for which data is available), some 3.5 million of the UK’s 10 million over-65s (that is, 35%, or more than one in three, of this cohort) needed help with one or more daily-living tasks2.
One further figure, which is commonly cited, is one in four. This was used by the Dilnot Commission, which investigated the reform of adult social care in 2011, and it’s still frequently used as a reference point – for example, in a 2021 House of Lords private member’s bill aiming to reform the insurance market for elderly social care3.
The financial implications of paying for care
Whichever set of figures you’re inclined to believe, one thing’s for sure: a significant proportion of us will either need care or be affected by someone close to us needing it.
This could be as a care recipient or a care giver, or by being impacted by the cost of paying for care – for example, by suffering a reduction in your joint wealth if you’re a couple or a reduction in the estate you’re likely to inherit from a parent, grandparent or other older relative.
It’s also clear that not enough of us are adequately prepared for what’s to come, says Tony Müdd, Divisional Director at St. James’s Place. “There’s still a significant percentage of people who believe, wrongly, that long-term care is covered by the NHS, and so the state will pay no matter what – despite the additional awareness created by the government’s recent health and social-care policy announcement,” he says.
There are multiple reasons for this, Tony believes. “It’s human nature to stick your head in the sand. If it wasn’t, people would buy life insurance, critical-illness cover and income protection in much greater volumes than they currently do. Unfortunately, a lot of people suffer from an ‘it won’t happen to me’ state of mind,” he says.
Be prepared: seek financial advice
If people fail to understand the likelihood that they’ll need long-term care, they won’t consider the financial implications of having to pay for that care, says Tony.
“There’s a small group of people who actually have enough money to pay for whatever care they need, and they’ll be able to afford it without any problems,” he says.
“And there’s a small minority whose assets are such that they will qualify for assistance from the state. However, there is a huge section in the middle for whom the state won’t provide, and they will have to pay – and, sadly, a lot of them won’t have enough money.”
He adds: “These are generally the people who either don’t know about this potential cost, or if they do know, they don’t know enough about it and don’t want to ask.”
The crucial action to take, he stresses, is to seek professional financial advice at the earliest possible stage in life. This is not necessarily with a view to specifically funding any long-term care you might need, but rather to ensure that you’re prepared for a broad range of eventualities, either good or bad.
“There are lots of life events and instances that we’re used to preparing for, the obvious one being retirement,” says Tony.
“And a possible need for care is another one of those that we should always add to the list. I would say, don’t make it a huge issue. Just discuss it with your financial adviser. It’s not going to happen to everyone – but it might well happen to you. So make it part of your thinking and your adviser can build that into your plan.”
1 Operational Guidance to Implement a Lifetime Cap on Care Costs, Department of Health & Social Care, March 2022
2 Evidence Review for Adult Social Care Reform: Summary Report, Department of Health & Social Care and Government Office for Science, December 2021
3 Elderly Social Care (Insurance) Bill, House of Lords Library, June 2021