Meals out, home improvements, holidays... there are plenty of fun ways to spend your pension pot. But it's essential to make sure you'll have enough to cover everything else you might need, and that includes later life care.
Yet in a new survey by Aegon, social care barely registers as a planning or funding priority when it comes to retirement saving. Less than one in ten (7%) people in the UK consider it a priority to put money away to fund possible future social care needs, with just 1% viewing it as their single greatest financial priority.
This is surprising given the issues people raise as retirement concerns, the financial services provider said. Health is ranked as the most important consideration, with more people worried about declining health (48%) than running out of money (42%). Within this, the need for assistance with basic activities (such as bathing, dressing and meal preparation) and the need to move into a nursing home are high on the list of retirement concerns.
The research comes after an earlier study by insurance industry trade association the Association of British Insurers found that 89% of over-65s have made no plans to pay for social care, while only 10% have, despite around half of all care users having to self-pay in some way.
Analysis from the Pensions Policy Institute showed that over a third of the population could benefit from incentivising ways of self-funding care, for example through tax exemptions.
For many people, there is an assumption that the government will deal with their long-term care in older age. Two in five (38%) of those surveyed by Aegon said they haven't factored in care as a future expense because it will be provided by the NHS, while 31% simply haven't considered it at all.
However, social care is rarely free, Age UK explains. Currently, if your capital is above £23,250 you're likely to have to pay your care fees in full. If your capital is under £23,250 you might get some help from the local council, but you may still need to contribute towards the fees.
"Many individuals face significant and at times catastrophic costs, wiping out their life savings, if they need to go into a care home," warned Steven Cameron, pensions director at Aegon. "While the issue of social care has been brought into sharp focus as a result of Covid, the research shows consideration of how to fund it is a worryingly low priority.
"It may be that too many people still believe that social care funding is an issue for the government to sort out. Compared to other countries, UK citizens benefit greatly from having access to the NHS, but all too often, people wrongly believe that their social care needs in later life will also be taken care of by the state.
"The issue of social care and how to cover personal contribution to costs needs much greater consideration within the overall retirement planning process."
After several delays, a new social care deal is expected to be unveiled by the UK government later this year.
"When the UK government does set out its new deal, it will be vital to incentivise people to plan ahead and save for their possible long-term care in older age," Cameron said.