These costs can vary depending on the level of care needed, the location and the quality of the provider. Self funders - those with investment assets of £23,250ⁱⁱ or more - will not have access to the same costs as the state, having to meet all the costs of care from their resources.

How do these costs compare to the income that a person can expect in later life? The Pension and Lifetime Savings Association (PLSA) has developed a set of annual retirement living standards for an individual, based on three levels of lifestyle: minimum, moderate and comfortable. The minimum level covers the basics, such as food, clothing, utilities and transport. The moderate level allows for more flexibility and choice, such as eating out, hobbies and holidays. The comfortable level enables a higher standard of living, such as a new car, home improvements and more frequent holidays.

The PLSA retirement living standards report 2024/5ⁱⁱⁱ puts the annual retirement living costs at:

The figures shown are the amounts of annual expenditure required to achieve the living standard, note different amounts apply for those living in London.

As you can see, the average cost of care can easily exceed the minimum and moderate levels of income, and even the comfortable level in some cases. This means that a person who needs care in later life could face a significant income shock, and may have to use their savings, sell their assets or rely on their family to cover the shortfall. This could have a negative impact on their quality of life, their financial security and their wellbeing.

The foreseeable harm of care costs

The income shock of care costs is not a remote possibility. It is a foreseeable harm that affects many people in later life. According to Age UK, one in four people aged 65 and over will need some form of care in later life^iv , and one in 10 will face care costs of more than £100,000. The likelihood of needing care increases with age, and women are more likely to need care than men, due to their longer life expectancy. If we consider the average time a person can expect to spend in care, this is 2.6 years for males and 3.6 years for females according to the ONS^v , for self funders this could result in the below costs:

Despite the high probability and the high cost of care, many people are unprepared and unaware of the options available to them. A survey by Just found that only 12% of people aged 45 and over have made any plans for paying for care, and only 6% have sought professional advice on the topic. Furthermore, only 15% of people are aware of the existence of care annuities, which are a type of insurance product that can provide a guaranteed income for life to cover care costs.

How to triage your clients for care advice

As a financial intermediary, you have a key role to play in helping your clients plan for their later life income and care needs. You can help them understand the risks and the options, and provide them with suitable advice and solutions. But how do you identify which clients need care advice, and when?

There are some strong signals that indicate that a client may need care advice, either for themselves or for a family member. These include:

• Moving into a care home, or considering doing so
• Getting care in their own home, or considering doing so
• Receiving attendance allowance, which is a state benefit for people who need help with personal care
• A sudden increase in spending, which may indicate that they're paying for care out of their income or savings

If you notice any of these signals, why not initiate a conversation with your client about their care needs and preferences, and assess their eligibility for state support and other sources of funding. You could also explain the benefits of care annuities, and how they can provide a secure and tax-efficient income for life to cover care costs.

Conclusion

Care costs are a major threat to later life income, and many people are unaware and unprepared for this risk. As a financial intermediary, you can help your clients protect themselves from the income shock of care costs, by providing them with timely and appropriate care advice and solutions. By doing so, you can add value to your client relationships, enhance your reputation and grow your business.

Sources:

1. Laing Buisson Care Homes For Older People Report UK Market Report 2025

2. Age UK paying for care https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/

3. Pensions and Lifetime Savings association ‘Retirement living standards report 2024/5’ https://www.retirementlivingstandards.org.uk/

4. Age UK state of health and Care https://www.ageuk.org.uk/globalassets/age-uk/documents/reports-and-publications/reports-and-briefings/health--wellbeing/age-uk-briefing-state-of-health-and-care-july-2023-abridged-version.pdf

5. Life expectancy in care homes in England and Wales females live 3.6 years and males 2.6 years on average https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/articles/lifeexpectancyincarehomesenglandandwales/2021to2022