It’s one of the last taboo subjects of modern society. Everyone’s aware of it, everyone knows it will happen one day but even now it’s still one of those topics that dare not mention its name.
And yet, barring a tragic accident, all of us will one day become old.
Each and everyone one of us.
Which unfortunately means it’s no good burying your head in the sand, pretending it’s not going to happen to you or someone you love or even just hoping it’ll all work out in the end. The time was that attitude might (might) have been OK but over the next twenty years the number of 85 year old’s living in the UK will double from 1.3 million to just under 2.8 million (that demographic is being highlighted for two reasons; it’s both the fastest growing demographic in the UK and the one most likely to need some kind of end of life care). That’s also combined with the fact that over the last 5-6 years there have been over £160 million in cuts to social care in real terms at a time when Age UK predicts an extra £4.8 billion a year will be needed just to look after everyone’s basic needs (getting dressed/washed etc.)
When asked Sally Greengross, chief executive of the International Longevity Centre, says, “Things have changed enormously because the population has changed – there are many more older people than there were. Part of the trend now is to live longer but one in three of us is going to get some form of dementia [those with dementia account for 80% of people in nursing homes in England, Wales and Northern Ireland] and will need some sort of care.”
All that means that going forwards the onus is very much going to be on you to make sure you’re looked after in your old age.
If you stand by without making plans and then rely on your local authority then you may well be in for a bit of a shock. You’ll only be entitled to free social care if you’re worth less than £23,250 in England (that combines savings, investments and property), or £23,750 in Wales and £25,520 in Scotland. To put that in perspective; the starting cost of a full time care home can be anywhere from £600 a week rising through to £1,000 in London; and that’s for an entry level care home! They can cost a lot more if you want to pay for something more luxurious. Exacerbating all this is the fact that ‘self-funders’ (as they’re called) can pay anything up to 43% more for a care home place than a Local Authority will (who have a lot more bargaining and buying power with care homes) meaning a care home will often prioritise someone who can pay for themselves over someone sent to them by the Local Authority (if you owned a care home and could only take one person who would you take? The person you an charge nearly 50% more for obviously.)
Now that may seem like a fairly grim picture that’s being painted and it’s easy to see why so many people choose to stick their fingers in their ears and make ‘la la la’ sounds rather than think about it but it doesn’t have to be all doom and gloom. There are many steps you can take at every stage of life to help with the situation and make your old age a lot more comfortable for both yourself and your life partner…
It’s not nice to think about but one day a loved one may have to come in and make decisions about your care for you. Try to make things easy for them by being organised. Make sure all your financial documents and plans are in one place. With them keep a clear list of everything coming in and out of your household finances, any savings or investments you have, any properties you own and any debts you might have. Knowing exactly what your finances are will be invaluable in sorting your care for you.
If the worst happens and you die without making a will (called dying intestate) then the law gets to specify how your money will be divided. That means your assets might not necessarily go to those you want them to after you’re gone. If you want to stay in control and decide who gets what then a will is a must. Whilst it’s possible to draw one up yourself, even a tiny, technical mistake can invalidate it so it’s always a clever idea to get it done professionally, however it’s worth noting any will you draw up now might be invalid if you marry/re-marry so make sure you keep it up to date by checking it every five years or so and possibly redrafting it.
Just because you’ve decided to tackle your old age head on it doesn’t mean your family will be happy to; they may think you’re being morbid or worrying about nothing but it is important you have a what if… conversation with your nearest and dearest letting them know exactly what your wishes would be if you became incapacitated or died.
Holding a What If… meeting with your family segues nicely into the next point; living wills.
A living will is a document in which you express how you’d want to be treated in different situations in case the time comes when you can’t make your desires known. It’s important you note that the term living will doesn’t actually have any legal meaning. It’s just what an advance decision notice or an advance statement is often called in layman’s terms. You can learn more on the difference between the two and which you think you might need on the AGE UK website here.
There’s two different types of power of attorney that you need might need to consider. The first is ordinary power of attorney which gives a nominated person the temporary right to handle your financial affairs, for instance if you were in hospital for a long time. You may or may not need help setting this up but it should cost around £150 from a solicitor.
The second type is lasting power of attorney and this gives the person you nominate the ongoing and indefinite ability to manage your affairs and unlike ordinary power of attorney it remains effective even if you become mentally incapacitated. (Lasting power of attorney is only called that in England and Wales. In Scotland it’s known as continuing power of attorney and enduring power of attorney in Northern Ireland).
If you think you might one day need lasting power of attorney (or it’s equivalent’s) then you should set it up well in advance of when you might need it as you won’t be able to if you’re deemed not to have ‘sufficient mental capacity’ (the legal ability to make decisions for yourself). Lasting power of attorney needs to be set up with the Court of Protection and will be more expensive than ordinary power of attorney but if a loved one is forced to handle your financial affairs without it it will be an even more expensive and complicated process for them.
A lot of people resent paying into a scheme for over forty years before they see any benefit from it, particularly with the bad press some pension companies have had recently but it’s important for you to set up a private pension.
Yes, almost everyone is entitled to a state pension and yes most people these days will have a contributory works pension but most financial experts state to maintain your standard of living after retirement you’ll need at least 70% of your pre-retirement salary; a figure which rises to 90% for those from lower earning households. With that in mind it’s important to start paying in to a private pension as early as possible and where possible keep a separate savings account for after your retirement that you pay into regularly and that earns as much interest as possible for you.
It may sound like an obvious point but after retirement, unless you’re super prepared, your ability to pay off debts will be vastly reduced compared to when you were working. With that in mind make sure you clear as many as possible whilst you can. They can also cause problems down the line if you’re trying to get into a care home but debt collection agencies are chasing you for your assets.
A good idea when considering the financial implications of retiring is to make a retirement budget. What do you plan to be doing? Will you be taking up any new hobbies? How expensive are they likely to be on a monthly basis? Do you have a bucket list you want to work through? Calculating how much you’ll need on a monthly and annual basis for retirement will make a multitude of other decisions you must make easier.
Whilst retirement ages are currently being reviewed by the Government (and are always a hot topic for older voters) there’s nothing to say you have to retire at the age of 60 or 65; in fact that decision could be completely wrong for you.
Obviously the main question you need to consider is if you can afford to retire but there are many other factors to consider before you make that choice, not the least of which being are you mentally prepared to retire? Whilst the thought of not having to get up for work every morning is enticing, it can leave some people angry or depressed with literally no reason to get up in the morning. When planning for retirement make sure you’ve thought about how you’ll fill your days. Will you be taking up a hobby? That’s great, but ask yourself; does it have to wait till you retire?
Sure you’ll have extra time to spend on it but why put it off? Why not start your plans now, staying physically and mentally active have many benefits, as you’ll see in the next few paragraphs.
Whilst the majority of the advice discussed so far has centered around your finances, they’re by no means the only thing you need to consider. Looking after yourself by losing weight, quitting smoking, only drinking in moderation and generally staying active will not only mean you live longer to enjoy all your financial planning, you’ll also increase the amount of time you can remain independent and able.
The last thing you need in your old age is stress. Try to envision the kind of needs you might have and deal with them whilst it’s still easy to do so. Are you still in the family home you’ve been in for the last 20/30 years? Do you still need three bedrooms?
A smaller house and garden will be much easier to manage as you get older.
Should you consider moving closer to family to form an extended support network?
Is there anything you can do to the home itself that might make it more navigable as you get older?
All these things are well worth considering as you reach retirement age.
That might come across as a bit of a facetious statement but it’s surprising how many peoples extended social networks resolve around either family or work or both. As you get older work friends may drift as you lose touch with them on a day to day basis and family might move away or pass on themselves. If you don’t have a wide network of friends you could be setting yourself up for isolation in your old age. Try to take stock of who you know and who you can stay in touch with easily after you retire and extend your range of social activities to widen your social circle(s).
It’s not just your physical health you need to look after either. Keeping mentally alert has a range of proven benefits from staving off depression to delaying/slowing down the onset of dementia.
Finally, you can’t control everything. People get old; it’s an inalienable fact of life and will happen to you. Plan for what you can and then just relax and enjoy your senior years; after all you’ve earnt it!