Nearly two million retirees have no plans to pay for long-term care

New research from Fidelity International suggests that the equivalent of nearly two million people aged 55-75 who have spare money have no plans to allocate any to pay for long term care.

The survey adds that of the quarter (24%) of those who do plan to set aside money, one in three (37%) will reserve less than £25,000 – enough to cover just one full year’s care.

Data shows that long term care is a major issue: the average stay in a nursing home is three years and around one in six people are likely to need it. Moreover, EU figures show from age 65 a man could spend eight years and a woman about ten years in ill health.

The Fidelity International white paper, ‘Improving Britain’s Retirement Income’, therefore warns that individuals need to start saving early in their lives and on a regular basis if they hope to meet the massive financial burden of long term care.

The research, conducted amongst 55 to 75 year olds who have savings or investments in addition to pensions, revealed:

Over two thirds of respondents (69% and equivalent to nearly two million people) have no plans to keep money back for long term care.

Three quarters (74%) of women and two thirds (66%) of men do not intend to set money aside.

Looking at those not yet retired, 68% are not planning to keep back any of their savings in the event that they or their partner may require long term care.
Of those already retired, this figure rises to 70%.

Simon Fraser, president of institutional business at Fidelity International, says “Longer lives can mean more time in retirement but also more time in poor health – a message that sadly does not seem to be getting through. The average nursing home stay is three years but of the people who will put some of their money aside, just one in five will reserve anywhere near enough to pay for it – and this assumes they haven’t run out of money by the time they are unwell. This all tells us that a significant chunk of a generation, those on the cusp of retirement, could spend their retirement in both poverty and ill health.

“If people want enough money to live on in retirement and pay for the things that really count – like spending twilight years in comfort and dignity let alone passing money onto to their children – they need to start saving regularly and in a wide basket of savings and investments.”