Retirees wanting a comfortable retirement and enough money to pay for later life care need to build up around £470,000 in retirement wealth due to the cost of living crisis, according to a new report.
The crisis has pushed up the cost of two years of care by £85,000 compared to five years ago, according to the report from Quilter.
Under the PLSA’s Retirement Living Standards a single person would need to build up a pot of £360,000 on top of the State Pension to cover a comfortable retirement.
However, according to Bupa the average length of later life care required is over two years, taking the retirement savings needed to £440,000 for residential care or £470,000 if nursing care is required.
The PLSA Retirement Living Standards sets an annual income need in retirement of around £33,600 a year.
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 is has become a poisoned chalice for successive Prime Ministers due to the eye-watering cost of fundamental reform.
“Whatever solution is eventually in place, people will still need to think carefully about saving for their own care, as whatever is on offer is likely to be the bare minimum. 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.”
The Government unveiled a plan to introduce an £86,000 cap on how much an individual has to spend on care costs in their lifetime, but the introduction of this cap has been delayed from October 2023 to October 2025.
