As you plan your retirement, you’ve likely spent countless hours imagining exciting activities, whether that’s going on a round-the-world trip, renovating your home, or simply spending more time with your loved ones.

Though, one aspect of your retirement you may have overlooked is the potential need for later-life care.

With life expectancies rising in the UK, this consideration is becoming increasingly important.

According to the Office for National Statistics, men aged 65 in the UK in 2020 could expect to live to 84.7 years old, rising to 87 years old for women.

By 2045, these forecasts are projected to increase to 86.9 years and 89.2 years, respectively.

While it is certainly positive that people are living longer, it also makes planning for the potential costs of long-term care more vital than ever.

Continue reading to discover why this is the case, and how a financial planner could help.

It’s vital to understand how much you may end up spending on care

As you’re planning the next phase of your life, it’s essential to remember that your income needs might change throughout retirement.

Early on, you may spend more as you tick off significant one-off purchases, such as dream holidays or home renovations.

Then, as you slow down, your income needs might decrease, only to rise again in the later years of retirement, especially due to deteriorating health.

If you do require residential care or need to move into a nursing home due to health concerns, the costs can be significant.

Carehome.co.uk reveals that the average weekly cost of care for self-funders in 2025 is:

 

  • £1,160 for residential care, translating to £60,320 a year
  • £1,410 for nursing care, equivalent to £73,320 a year.

 

Moreover, research from Knight Frank shows that the average length of stay in care homes is around 26 months. This means you might face total costs of £120,640 for residential care or £146,640 for nursing care.

The same source shows that the average length of stay is slightly shorter in the Yorkshire and The Humber area, coming in at 17 months. That means you might spend around £78,880 for residential care or £95,880 for nursing care.

Without proper planning, these expenses could create a significant shortfall later in life, potentially affecting your ability to maintain your standard of living or even leave a meaningful inheritance for your loved ones.

You may receive state help for funding, but not if you have significant assets

While state funding for care is available, the process can be complex and depends on your financial situation.

Indeed, to qualify for state-funded care, you must first complete a care assessment to determine the type of support you need.

This is followed by a financial evaluation, known as a “means test”, which considers your income, savings, and assets.

As of 2024/25, if your assets exceed £23,250 – known as the “upper capital limit” (UCL) – you will need to fund your own care.

If your assets are below £14,250 – the “lower capital limit” (LCL) – you’ll only contribute what you can afford from your income.

Meanwhile, if your wealth sits between the UCL and LCL, you’d typically pay what you can afford from your income plus a means-tested portion of your assets.

There were plans to increase these limits under the previous Conservative government. However, the new chancellor Rachel Reeves announced in July 2024 that these would not be going ahead.

There are several ways to plan ahead for potential care costs

If you’ve accumulated significant funds and assets over the years, you’ll likely need to pay for your own care. There are several strategies to consider when planning for these expenses.

One approach is to set aside a specific pot of money dedicated to covering potential care costs. If you’re still working, you could allocate a portion of your income each month to this fund.

Though, if you’re already retired, it might be prudent to earmark a portion of your pension for care.

Either way, it’s essential to strike a balance. You don’t want to deplete funds you’ve intended for your retirement lifestyle, as this could limit your ability to enjoy the activities you’ve been dreaming of.

By planning for care thoughtfully, you could prepare for costs without having to sacrifice your standard of living.

A planner could help you account for care in your plans

While it is undoubtedly prudent to plan for potential care, it’s also worth noting that the chances of needing it might be lower than you think.

According to the Office for National Statistics, the 2021 census found that only 2.5% of the population aged 65 years and over in England and Wales were living in care homes.

Regardless, preparing for this possibility could provide some much-needed peace of mind.

If you do end up needing care, you’ll have the funds necessary to cover the costs. If not, the wealth you’ve earmarked could be repurposed for other uses, such as leaving a legacy for your family.

Regardless of whether you require care later in life, working with a financial planner can be highly valuable.

They can help you integrate potential care costs into your overall retirement plan, ensuring you don’t experience a shortfall when you need the money most.

What’s more, your planner could assist you in deciding what to do with earmarked funds if you don’t use them for care.

For instance, they might suggest strategies such as gifting or setting up trusts to mitigate Inheritance Tax (IHT) on this portion of your wealth.

Ultimately, working with a planner can give you confidence that your financial future is secure, no matter how long you live or the challenges you might face.

To find out how we could help you, email hello@cordinerwealth.co.uk or call 0113 262 1242.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate estate planning, tax planning, or trusts.