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Planning for your final years: Does it really cost £100,000 a year?

Will your last years be the most expensive of your life? Read how to prepare and why the bills can stack up.

By Ruth Jackson-Kirby | Published - 5 Nov 2025

Important info

This article is for general guidance only and is not financial or professional advice. Any links are for your own information, and do not constitute any form of recommendation by Saga. You should not solely rely on this information to make any decisions, and consider seeking independent professional advice. All figures and information in this article are correct at the time of publishing, but laws, entitlements, tax treatments and allowances may change in the future.

Are your final years really the most expensive of your life? Some advisers are suggesting you should budget for £100,000 a year – a figure that will be out of reach for many people.

Or if you do have those kinds of sums available, you may be thinking about gifting them instead, perhaps for inheritance tax reasons.

It’s easy to feel overwhelmed and unsure how much you’ll actually need. But understanding the real numbers – and what you can do to prepare – could make all the difference.

What’s on this page?

What does later life care cost in the UK?
How much will I have to pay towards my care?
The issue we prefer not to think about
How to prepare for the cost of your final years

What does later life care cost in the UK?

The idea of a lifetime cap or maximum contribution to care costs has been much debated – and was even a government policy introduced in 2021. But it has since been abandoned without ever being implemented. So there is the potential for total costs to reach high levels.

Investment management company Charles Stanley suggests that you should budget for the last three years of your life to cost around £100,000 a year. Sounds a lot? The figure certainly isn’t an average cost – many people will spend nowhere near this – but rather a planning assumption that they use when modelling clients’ retirement finances.

“As a rule of thumb, we advise planning for needing care in the final three years of life – a total cost of £300,000,” explains Lisa Caplan, director of advice and guidance at Charles Stanley Direct.

This figure is based in part on average residential and nursing home costs, which can vary widely. Even estimates of the ‘average’ cost vary significantly – for example, Age UK figures (published in 2024) suggest £49,348 per year for residential care and £65,884 for nursing care, while carehome.co.uk suggests £67,496 for residential care and £79,820 for nursing care.

The Charles Stanley suggestion of £100,000 is an estimate rather than an exact guide. It factors in that you might need to spend money on other things, whether that’s private medical expenses, transport, adapting your home, or home help. There’s also an allowance for inflation and contingency costs (if needs become more complex, for example).

Most people won’t need to spend in all of these areas.

How much will I have to pay towards my care?

If you need care in later life, then your council may help with the cost. Help is means-tested and the system varies according to where in the UK you live.

In England and Northern Ireland, if you have assets worth more than £23,250 then you will have to pay for your own care bill. If you have less than £14,250, then the council will pay for your care – but your income will still go towards your fees. Between those two limits, you’ll be expected to make a partial contribution.

Your home counts as an asset and is included in the calculations unless you are going to receive care in your home, or a spouse, civil partner or certain dependants will continue to live in it.

In Wales, you might be asked to pay up to £100 a week to the cost of care in your own home, if you have a ‘high level’ of disposable income, or if you have savings and investments worth more than £24,000 (not including your own home).

If you need residential care in Wales, the local authority will give you some support with the cost of residential care if your assets (usually including your home) are worth less than £50,000. The amount you need to pay will depend on your income.

In England, Wales and Northern Ireland, if your main reason for needing care is considered to be a medical issue, you should be eligible for NHS continuing care, which means it is provided for free. But in practice claiming it can be difficult.

Read more about NHS continuing care and how to save on paying for care from money expert Paul Lewis.

In Scotland, personal and nursing care is free for those assessed as needing it in their own homes. (This does not apply to other help like help with housework and shopping.) If you need to go into a care home you’ll get a £254.60 a week government contribution for personal care costs and £114.55 a week for nursing care.

Don’t forget to check if you qualify for any relevant benefits, such as attendance allowance (called pension age disability payment in Scotland), which is a benefit to support anyone of pension age who needs extra support because of disability or illness.

The issue we prefer not to think about

Justin Modray, founder of Candid Financial Advice, says: “Making provision for potential care costs is a massive elephant in the room for many of us, the issue being we don’t know for how long we might need care, if at all, or how much it’ll cost. And, of course, it’s a grim topic, so easy to bury our heads in the sand and ignore.”

Charles Stanley’s rough guide can be helpful as it gives you a figure to aim for, but it doesn’t necessarily apply to everyone. Care costs vary significantly, depending on where you live, as well as the fact that everyone has different care needs and different levels of family support.

If you have concerns, the best approach is to speak to a financial adviser. They can look at your finances and help you work out the best way to plan for care in your twilight years.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, says: “No-one wants to think that they will ever be in the position of needing to go into care, so it is understandable that people may be hesitant to plan for it.

“However, with costs often eye-wateringly high coupled with real uncertainty around how long it will need to be paid for, then it’s a conversation that needs to be had.”

How to prepare for the cost of your final years

Knowing how much you may need for care in your final years is a great start, but the next step is planning for it.

Start by looking at what your retirement income is likely to be. Caplan says: “The ideal scenario is that guaranteed income from your pension schemes and the state pension covers all or close to all, of the care cost. If not, if you have savings, investments or property, the combined income from these assets on top may meet a significant portion of your bill.”

If your income doesn’t cover the total cost of your care, you may be able to arrange a deferred payment agreement with your council. This allows you to delay paying for your care until after your death, when the council recoups the cost from the sale of your home.

Alternatively you might have money, but be worrying about inheritance tax and contemplating lifetime gifts to reduce the value of your estate.

While it’s sensible to think about inheritance, it’s more important to ensure your own financial security. A considered financial plan will help support your loved ones and you in your later years.

This means being careful not to give away too much, while thinking about tax, and leave yourself short if you do end up needing care. You also need to avoid making gifts that your local authority might view as “deliberate deprivation of assets” – in other words that you’ve given them on purpose to avoid care costs.

Modray says: “Gifts usually only fall outside of your estate if you’re still alive seven years after making them, this can be a challenge in itself. In our twilight years, few of us know whether we’ll require care in seven-plus years, let alone whether we’ll still be alive.

“If you do give too much away, the beneficiaries could give the money back to you in the future if required, assuming they agree and haven’t already spent it. This will void the original gift for inheritance tax purposes, but will at least help cover care costs.”

Planning for care may not be the most cheerful task, but it can relieve a great deal of stress in the future. Even a rough plan puts you ahead of most people. Thinking it through means you and your family won’t have to make rushed, difficult decisions later on.