Ageing population - the factsPosted on: 04 October 2016 by Steve Wanless
Life isn’t simple, you never know what is going to be around the corner, and there are a number of factors that can impact on the future for you and your family.
With an ageing population and funded support diminishing, how can I ensure I get the care I may need without impacting on my family’s future?
The simple answer is to speak to an independent financial adviser and plan ahead. But life isn’t that simple, you never know what is going to be around the corner, and there are a number of factors that can impact on the future for you and your family.
The facts about UK ageing
Between 2015 and 2020 the general population is expected to rise 3% with the numbers aged over 65 expected to increase by 12% (1.1 million). The numbers aged over 85 is set to rise by 18% (300,000), while the number of centenarians could increase by 40% (7,000). (1)
These rises are also going to have an effect on public spending.
Around 55% of welfare spending (£114bn in 2014/15) is currently paid to pensioners, with the state pension by far the largest element of this. This expenditure is forecast to increase by an average of £2.8 billion a year over the next five years, resulting in spending of £128 billion by 2019/20.
Impact of ageing on the NHS
Growing numbers of elderly people will also have an impact on the NHS and social care expenditure with the prevalence of long-term health conditions that increase with age.
The Department of Health also estimates that the average cost of providing hospital and community health services for a person aged 85 years or more is around three times greater than for a person aged 65 to 74 years. (1)
A recent report by King’s Fund and Nuffield Trust found that the number of over 65s helped by councils has fallen by a quarter from 2010 to 2014 to 850,000. (2)
In the five years to 2015, care spend by councils has fallen in real terms by 25% to £5.1bn.
NHS and individual contributions topped this up to £7.2bn, but this still equates to a cut of 9%, while 40% of money paid to care homes comes directly as a private cost.
Funding cuts have also created an issue, and we have seen care home providers in 59 local authorities walk away from council contracts due to cost pressures.
Ironically, vastly improved life expectancy, a result of medical breakthroughs, is causing an impact on the health services.
Increased life expectancy
This can be seen with projected life expectancies. A man born in the UK in 1981 had a life expectancy of 84 years. A boy born in 2030 will be expected to live until he is 91. While a girl born in 1981 is expected to live until 89, and this could rise to 95 for those girls born in 2030. (3)
In Cornwall four in ten people pay for their own care, while those in residential care contribute, on average, £150 towards a weekly bill of £448 (4).
Looking ahead to the pressures of an ageing population and Government spending, then private contributions could increase.
Now we know the facts, so how can we prepare and deal with them?
Firstly, plan ahead. Have that difficult conversation with your parents or your children about what may happen. Think about appointing a lasting power of attorney, as in the worst case scenario assets can be frozen and take up to six months to be unlocked if you’re not deemed to be fit to make those decisions.
Check your benefit entitlements, such as attendance allowance, or see if you can set up a deferred payment scheme with the council, which is often cheaper than triggering equity release on your home.
Also, avoid getting caught in the depravation trap as local authorities will look at gifts made to family members and will adjust accordingly if they think they have been made to avoid paying care home charges.
Finally, check the cashflow and think about how money and assets can be managed. Buying an annuity is a consideration as tax-free payments can be made directly to a care home provider.
With so many aspects to consider it’s worth taking care of your assets and speak to an independent financial adviser to help you put together a plan to keep your finances in good health.
The value of shares and investments can go down as well as up. Your home may be repossessed if you do not keep up repayments on your mortgage.
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