UK high-net-worth Baby Boomers may be “seriously ill-prepared” for later life costs, according to research.
The poll of more than a thousand HNWs, by Charles Stanley, revealed 28 per cent of the Baby Boomer generation had not ring-fenced money to fund any care they may need and still leave their family some inheritance.
According to Charles Stanley, there was a clear reliance on other financial assets or people to help fund any care respondents may need, with 34 per cent of baby boomer respondents saying they would rely on the sale of their property.
This number rose among younger generations, with 42 per cent of both Gen Z and Millenials saying they would also rely on property sales to fund care costs.
The research also revealed a difference in attitude between generations when it came to funding care.
Gen Z (43 per cent) were much more likely than Baby Boomers (12 per cent) to acknowledge they would need financial support from their children in later life.
While 43 per cent of Millennials surveyed agreed that any care they would need would be funded by their spouse, compared to 26 per cent of Baby Boomers.
Harry Bell, director of financial planning at Charles Stanley, said: “From a financial planning perspective, our research raises the alarm bells for a few reasons. With an ageing population and a soaring demand for later-life care, families risk having to make serious compromises in order to pay for unexpected long-term care costs.
“Later-life care is a family matter, and our research makes it clear that difficult conversations are not happening nearly as much nor as early as they need to.”
The research also found many were planning to lean on government support when it came to care costs, and therefore may be factoring this into financial planning considerations.
Overall, 34 per cent of HNWs were willing to spend their wealth to qualify for state support so that they or their family did not have to pay for care costs out of their own pockets.
A quarter of Baby Boomers were planning to do this, while 41 per cent of Millennial respondents said the same.
Despite the costs of care, half of HNWs have not discussed the topic of later-life and long-term care with their families, with this rising to 57 per cent of Baby Boomers.
“Although we all hope for long-term independence in retirement, it’s vital to have the right plans in place to account for any eventuality.
“There is a delicate balancing act to be performed between gifting, spending and leaving enough funds for care - something a financial planner is best placed to assist with. A discussion with a financial adviser can go a long way to giving an idea of how best to set aside capital for use in later-life and create contingency plans best suited for each individual,” Bell added.
