More than a quarter (28 per cent) of high net worth (HNW) Baby Boomers have not ring-fenced enough money to fund any care they may need in later life, research from Charles Stanley has shown.

Charles Stanley warned that UK HNW individuals may be seriously ill-prepared for the costs of later life, with residential care home costs averaging around £56,000 a year.

When paying for any later-life costs, the research identified a reliance on other financial assets or people to help fund any care they may need.

Over a third (34 per cent) of Baby Boomer respondents stated they would rely on the sale of their property to obtain the funds necessary for their later-life care.

This figure rises among younger generations, with 42 per cent of both Generation Z and Millennials believing they will rely on the sale of property to fund care costs.

Charles Stanley’s study also found differences in attitude between generations, with 43 per cent of Millennials expecting their spouse to cover their care needs, compared to 26 per cent of Baby Boomers.

Furthermore, 43 per cent of Generation Z acknowledge that they will need financial support from their children in later life compared to 12 per cent of Baby Boomers.

The research also found that many who were planning to use government support when it comes to care costs, and therefore may be factoring this into financial planning considerations.

More than a third (34 per cent) of HNW individuals were willing to spend their wealth to qualify for state support so they and their family do not have to pay for care costs themselves.

A quarter (25 per cent) of Baby Boomers are planning to do this, while 41 per cent of Millennial respondents said the same.

Despite the “significant costs” that may be needed for later life and the reliance on family to support them, half (50 per cent) of HNW individuals have not discussed the topic of later-life and long-term care with their families, with this rising to 57 per cent of Baby Boomers.

“From a financial planning perspective, our research raises the alarm bells for a few reasons,” commented Charles Stanley director of financial planning, Harry Bell.

“With an ageing population and a soaring demand for later-life care, families risk having to make serious compromises in order to pay for unexpected long-term care costs. Later-life care is a family matter, and our research makes it clear that difficult conversations are not happening nearly as much nor as early as they need to.

“Although we all hope for long-term independence in retirement, it’s vital to have the right plans in place to account for any eventuality.

“There is a delicate balancing act to be performed between gifting, spending and leaving enough funds for care - something a financial planner is best placed to assist with.

“A discussion with a financial adviser can go a long way to giving an idea of how best to set aside capital for use in later-life and create contingency plans best suited for each individual.”

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