Most people think of retirement in terms of income. Can we afford to stop work? Can we go on holiday? Can we help the children? Can we spend more while we are still fit and healthy? But there is another one that often gets missed. What happens if one of us needs care?
Talking about care is not easy. Most couples find it hard. Worrying about the future is normal. If you are not sure how to start, you could share a story you have heard or mention an article you read. You might say, “I have been thinking about how we would cope if one of us ever needed extra help.” It helps to start with concern, not solutions. Talking about care early, while you still have choices, can help you both feel more at ease. Planning ahead means you are less likely to face rushed decisions later. A good retirement plan should not assume that everything will go well. It should check what happens if life gets tougher. Care is one of those tests.
Why care can change the plan
Care can change your retirement plan:
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You might need more income.
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You might need to keep more cash handy.
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You might need to use your home.
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You might have less to leave to your family.
For example, if one partner needs care costing £5,000 a month, that is £60,000 a year. If you have not planned for this, your savings could run down fast. This extra cost can make a big difference to how long your money lasts or what is left for your family.
For couples, there is another important point. If one person needs care, the other still needs enough money to live well. The plan must protect both people, not just cover the care fees. The biggest risk is not always the cost. The bigger risk is having no plan. That can leave your family making quick decisions when things are already stressful.
Who pays for care?
The rules depend on where you live in the UK, and they are not the same everywhere. The figures below are for England. In Scotland, Wales, and Northern Ireland, the rules for funding care can be different, so it is important to check local guidance for your area. If you need care, your local council may carry out a financial assessment. This looks at your income, savings, investments, and sometimes your home.
At the time of writing, if you have more than £23,250 in capital, you will usually pay for your own care. If you have between £14,250 and £23,250, you may get some help, but you may still need to pay something. If you have less than £14,250, that capital is usually ignored in the assessment, although your income can still be taken into account. These numbers are low compared to what many people have in pensions, ISAs, savings, and homes. So many retired people may have to pay for care themselves, at least at first.
It helps to know which assets count. Usually, savings, investments, and cash in the bank are included in the financial assessment. In most cases, your main home is only counted if you move permanently into a care home and your partner or another qualifying person does not live there. Most personal possessions and belongings, as well as some types of pension income, are not included, but it is important to check your own details. This simple summary lets couples quickly see how their own finances might be treated.
Will we have to sell the house?
This is a big worry for many people. The answer is maybe, but not always. It depends on your situation. It depends on your situation. If you need care in your own home, your home is not usually sold to pay for that care. If you move into a care home permanently, the value of your home may be included in the financial assessment. There are important exceptions. For example, if your husband, wife, civil partner, or partner still lives in the home, it is usually not counted.
This is why planning for care as a couple matters. It is not just about paying the care fees. It is also about making sure the person still at home can live well. We need to check this before there is a crisis.
Can I give money away to avoid care fees?
You need to be careful. Giving money or assets away can be reasonable. You may want to help children, reduce inheritance tax, or enjoy seeing your family benefit during your lifetime. But giving money away just to avoid care fees can cause problems. Local councils can check if you have tried to reduce your assets on purpose to avoid paying for care. This is called deprivation of assets. Councils can still count the money you gave away when they work out if you should pay for care.
There is no simple seven-year rule for care fees, even though many people think there is. If you give money away, you need a good reason and a clear record of why you did it. Good reasons for gifting could include helping children with university fees, supporting grandchildren, marking special birthdays or weddings, or making regular small gifts for special occasions. To help avoid misunderstandings with local authorities, it is a good idea to keep notes or written explanations of when and why you made each gift, email correspondence, or even receipts. This can show that the gift had a genuine purpose beyond avoiding care fees.
How cashflow planning helps
No one knows if care will be needed. But you can test different scenarios. For example, you can check what happens if neither of you needs care, if one of you needs care at 85, if care is needed for three years, or if one person dies early and the survivor lives for another 15 years.
You can also check what happens if you give money to children now and then need care later. Or what happens if care costs rise faster than normal inflation. This will not give you a perfect answer. No plan can do that. But it does give you a clearer picture. It helps you see if your plan can cope if things go wrong. If your plan still works after you test it for care costs, that is good. If it does not, it is better to find out now, while you can still make changes.
What about pensions?
Pensions have often been helpful for estate planning. Many people spend their ISAs and other savings first, and leave their pensions for later or for their family. This has worked well for many years. That may still be right in some cases. But from 6 April 2027, most unused pension funds and pension death benefits are expected to fall within the estate for inheritance tax purposes. This means your heirs could face a higher inheritance tax bill if there is a large pension left unused. For couples, it could be important to check whether taking income from pensions earlier or using your assets differently might help reduce a future tax charge. It is a good idea to check your overall estate plan so you are not caught out by this change.
This means the old habit of leaving pensions until last may need to change for some people. The right answer depends on your income needs, tax, care risk, estate size, and family plans. This is why it is important to review your retirement plan regularly.
What should you do now?
You do not need to plan for every possible care situation. But you should take a few simple steps now.
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Make sure you have Lasting Powers of Attorney in place. These allow people you trust to help if you lose capacity. You can set up a Lasting Power of Attorney online or using paper forms. Many people find it helpful to talk to a solicitor for guidance, but you can also start the process yourself through the government website. Taking this step is easier than it sounds and can bring great peace of mind.
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Keep a clear record of your pensions, savings, investments, bank accounts, insurance policies, and key contacts. This makes life much easier for your family if they ever need to help.
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Think carefully before making large gifts. Helping family is good, but you should know how it could affect your own future security. Make sure you will still have enough for yourself.
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Keep enough money that you can easily get to. A good retirement plan should not have everything locked away or hard to sell. You want to be able to get cash if you need it.
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Most importantly, test your retirement plan to see what happens if you need care. Include care costs, especially if you are planning as a couple. To start, make a simple list of your income, savings, and likely expenses. Then add an estimate for care fees to see how this could change things. You can use online calculators for a quick check, such as the MoneyHelper Care Costs Calculator or Age UK’s online care fees advice tool. These are good starting points and can help you get a clearer picture of what care might cost. You can also talk to a financial adviser who can help you test different scenarios.
