Rising life expectancy is good news but it could present some challenges, including making provisions for potentially needing additional help later in life. An Age UK report has highlighted how many people have unmet care needs and the lack of financial support from local authorities. So, if you haven’t already, creating a care fund as part of your financial plan could offer you valuable protection later in life.

A care fund is simply a pot of money that’s set aside to cover expenses related to care. That might include paying someone to come into your home to help with day-to-day tasks or moving into a residential care home. You might hold this money in a savings account, earmark a portion of your pension for it, or have investments you could sell if necessary.

A care fund could offer you peace of mind and more options if you find you need care later in life.

2 million over-65s have unmet care and support needs

According to the Age UK report, the number of people in the UK aged 50 and over is increasing rapidly.

As of 2024, there are 22 million people aged 50 and over in England alone. This figure is expected to rise by almost 20% over the next two decades – the equivalent of 4.3 million people. This is likely to mean more people have care needs and place pressure on a system that is already stretched.

Indeed, Age UK estimates there are already around 2 million people aged over 65 who have unmet care needs.

The survey asked people aged over 65 about the challenges they face. The participants said they struggle to:

• Dress (10%)
• Get in and out of bed (6%)
• Bathe (6%)
• Walk across a room (5%)
• Go to the toilet (4%)
• Eat (1%).

A large number of those who reported needing help with these everyday tasks aren’t receiving the support they need. There are many reasons why this may be, but, for some, finances could play a role.

The report found that the number of people aged over 75 in England has grown by around a fifth between 2013 and 2024. Yet, despite this, fewer older people are receiving local authority long-term care.

Indeed, most people will need to pay for at least a proportion of care costs themselves.

In the 2024/25 tax year, in England and Northern Ireland, if you have savings and assets of more than £14,250, you will need to pay for some of your care fees. If the value of your assets exceeds £23,250, you will need to pay for all your care fees.

The thresholds for paying for care are different in Scotland and Wales.

So, in most cases, you’ll need to pay for some of the costs associated with care, which can be substantial. According to figures from carehome.co.uk, the average cost of a residential care home for a year is more than £60,000. If nursing is required, it could rise to more than £73,000 a year.

Even if you’re able to live independently, the cost of having someone visit to provide a helping hand with some everyday tasks can add up. The rate varies across the country, but the average is around £18 an hour. Just 10 hours a week at the average rate would add up to more than £9,000 a year.

Setting aside some money for care could mean you don’t have to worry about finances if you find you’d benefit from help. It might mean you don’t face a delay when you need to access services.

A care fund could help you create the lifestyle you want

A care fund isn’t just about paying for the cost of care either, it may also provide you with more freedom for creating the lifestyle you want.

With money set aside, you might have more options when selecting the care services you need.

For example, you might want to choose a care home that’s close to your children so they’re able to visit or one that has facilities that will allow you to continue your hobbies. Alternatively, you may prefer to stay in your own home and pay for a live-in carer to provide daily support or be able to supplement a loved one’s income so they’re able to reduce their working hours to care for you.

It can be difficult to think about what you’d like to happen if you needed help or couldn’t live independently. Yet, weighing up the options now could mean you’re in a better position to make decisions should you need to.

Making your care fund part of your estate plan

Setting up a care fund could be an important way to protect you if you need help later in life. But, of course, you hope you won’t need it.

So, it’s worth thinking about what you’d like to happen to your care fund if it remains untouched. You might want to pass it on to family members through a will, make a charitable donation, or make gifts to loved ones during your later years. Making your care fund part of your estate plan could ensure that it’s distributed in line with your wishes.

Contact us to discuss how to manage potential care costs

We’re here to help you create a financial plan that gives you confidence in your financial future, including if you need care or support later in life. Please contact us to arrange a meeting.

Please note:

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

The Financial Conduct Authority does not regulate estate planning.