Millions of Britons are relying on inheritance to fund their retirement but haven’t understood how the cost of their parent’s care will eat into their legacies, according to NFU Mutual.
New research from the insurance, pensions and investments provider reveals that 15% of Britons are clinging to the hope of inheriting property or cash from their parents to fund their own retirement.
But according to the findings these people could be let down. Over a million homes have been sold in the last five years to fund care costs and more than two million elderly people have had to use their savings to fund care.
As a result, three in every four people whose parents go into care now see most of their inheritance eaten up by the associated costs.
Sean McCann, personal finance spokesperson at NFU Mutual, said: “Younger generations could be in for a long wait if they’re banking on an inheritance to fund their retirement. People should be making their own retirement plans rather than factoring in property and wealth that could be whittled away by the cost of care and inheritance tax.”
The research highlighted naivety regarding the cost of care and a lack of inheritance tax planning. 31% say their parents make no plans for the impact of old age care on their estates and 32% admit they fail to factor this cost into their own planning.
And the gap in retirement provision is set to worsen as councils tighten budgets for elderly residential care. Freedom of Information (FOI) data collected by NFU Mutual shows that more than half of councils (53%) have slashed their care budgets over the last five years or reduced actual spending, suggesting a tightening of purse strings when it comes to old age care.
McCann added: “There’s no magic bullet to avoid care home fees during your lifetime but, with careful planning, you could protect your share of the family’s wealth after you die.
“Anyone who wants to see their life savings and the family home handed down to children and grandchildren needs to take professional advice to make sure they’re not paying more tax than they need to.”