Concerns over care costs are holding back baby boomers from spending in retirement, a new report has warned.
Research by Aegon, the pensions and investment company, shows that four in 10 people aged 55-plus are so worried about expensive future care bills that they are not making the most of their early retirement years.
The analysis also found that a third of the post-war baby boomer generation born between 1946 and 1964 say that having enough money to cover care costs is important to them.
In 2019, the final members of the baby boomer generation turn 55, the age which they can access their pension.
Steven Cameron, Pensions Director at Aegon commented: “The research shows that a large proportion of baby boomers are concerned about funding their future care costs, and with good reason. The cost of formal care can be immense and retirees often face selling their house and rapidly depleting their lifetime savings to pay for this, extinguishing any plans to pass on an inheritance to future generations.
“What makes it worse is that until the government sets out clearly how much individuals will in future be expected to contribute, it’s almost impossible to plan ahead. Fear of being unable to ‘pay their way’ means some are spending less than they can afford to, stopping them fully enjoying their earlier retirement years.”
The cost of formal care has led many to rely on relatives and friends to provide unpaid informal care. With more people living into their 90s and beyond, many baby boomers thinking ahead to their own care needs will have elderly parents to care for and may face having to opt to work part time or give up work entirely, which will have a negative effect on their own finances, Aegon has warned.
Referring to the delayed Social Care Green paper, Cameron said: “Sadly, a new deal on social care funding has been one of the biggest casualties of a Government so absorbed by Brexit negotiations. With more of us living longer, arriving at a clear and sustainable solution is fast becoming one of society’s greatest challenges.
“On a positive note, once the government does set out a new deal on what it will pay and what individuals will be expected to pay, the Baby Boomer generation looks keen to make plans accordingly. Hopefully that will allow baby boomers to protect any inheritance aspirations but also have the confidence to enjoy the retirement savings they’ve built up.”