What is Late Life Planning and Why is it Important?
Faced with our own mortality, especially in the wake of the Coronavirus pandemic, many of us can't help feeling anxious about what will happen to our loved ones if we should die unexpectedly, or indeed, pass away due to an illness or condition.
While it is important to consider the potential impact of getting Covid-19 on you and your loved ones, you should still plan for later life regardless of the pandemic, as you will always want to protect your loved ones and, of course, you'll want to protect your hard-earned assets (estate) and enjoy your retirement.
8 statistical reasons to consider late life planning:
1. According to the Office of National Statistics (ONS), there were 11.8 million British residents aged 65 years or more in 2016 - that’s 18% of the total UK population. This percentage is predicted to increase to a quarter of the UK population by 2050.
2. Age UK has reported that 2 million (16% of) pensioners in the UK live in poverty.
3. Unbiased.co.uk, say there are 31 million people in the UK without a Will.
4. A survey from Statista revealed that only around one-fifth of the UK population has a life insurance policy in place.
5. Research by funeralguide.co.uk revealed that only 6% of UK adults have pre-paid funeral plans.
6. An end of life care survey by the National Audit Office suggests that between 50% and 70% of people would prefer to die at home. However, the ONS has revealed that only 19% of deaths in people 75 years or more occur at home.
7. Sfe.legal has reported that only 12% of people have some form of Lasting Power of Attorney in place (for if they lose mental capacity later on in life).
8. An Organ Donation Attitudinal Trace survey revealed only 40% of people let their family know their organ donation wishes, causing major distress to family members who do not want their relative’s organs to be denoted.
Read more: Why You Need to Make a Will
What is late life planning?
Late-life planning can be defined as the preparing and organising your personal, legal and financial matters for your twilight years and your death. Doing this will avoid unnecessary financial and emotional distress being suffered by you and your loved ones.
The best way to prepare for later life is by addressing the following 3 key areas of late life planning:
- Life insurance
- Mortgage and loan repayments (these can be covered by a life cover policy in the event of your death)
- Pensions, savings and investments
- Property and assets (you can protect these by making a will)
- Inheritance tax planning (also known as estate planning)
- Equity release
- Wills and estate planning
- Funeral planning
- Organ donation
- Lasting Power of Attorney (mental capacity)
- Living Will (advance decision)
- Long-term care planning
- End of life planning
Why is later life planning so important?
Later life planning is essential for a happier, more comfortable and financially secure future for you and your family.
Now that we’re all living longer, your retirement years can be a huge chunk of your life. Do you really want to potentially spend a quarter of your life living on the breadline and scouring reduced items in the supermarket, shivering in your own home and never having a holiday?
If you’re solely relying on a state pension for your retirement income, this is not usually enough to (comfortably) live on and pension planning is, therefore, an essential element of planning your life for a happy retirement.
You might like: New Pension Rules to be Enforced in February 2021
Again, because we are living longer, 1 in every 14 of the UK population aged 65 years or more will suffer from dementia and over the age of 80, that statistic increases to 1 in every 6 of us.
If you lose mental capacity, having a Lasting Power of Attorney in place will give legal permission to your trusted appointed person to deal with your finances and your wellbeing on your behalf if you ever become unable to do this yourself.
In addition, the Alzheimer’s Society has reported that the average dementia care home can cost between £600 and £1,200 per week. So, if you haven’t financially prepared for these costs (i.e. with a Will trust and estate planning or specialist life insurance), your assets or property could be completely swallowed up by care home fees, leaving no inheritance for your children.
Important questions to consider
While this may be difficult and potentially upsetting to do, you'll need to think about the following things in order to understand whether or not you and your loved ones are fully prepared for the unexpected:
- What if you die suddenly and unexpectedly tomorrow?
- What financial support would your family have?
- Would they have enough money to live on and pay the mortgage or rent?
- Will they easily have access to the necessary funds to pay for your funeral?
- Are you sure your property will go to your children?
- Are your family aware of your organ donation wishes or other personal wishes for your later life?
Preparing for death by making a Will and a funeral plan, insuring your life, putting your property in trust and letting your family know your funeral and organ donation wishes are key elements of later life planning.
We hope this article has given you food for thought and you’ll perhaps now give serious consideration to planning ahead for your future if not for yourself, for the sake of your loved ones.
For further advice and information, please tap any of the links above to see our related articles, or read our useful guides below.