Dementia Care: Planning Your Finances Ahead

Have you thought about how a dementia diagnosis could affect you, your parents or your wider family? Dementia care can bring emotional, practical and financial challenges for families. Here we explain why planning ahead matters, how dementia care may be paid for, and the practical steps you can take now to support the people you love.

Dementia is something many families worry about. For some, the concern is personal. For others, it may be about a parent, partner or close family member who could need more support in the future. It is also a topic that can affect more than one generation at the same time. New research shows that 49% of British adults haven’t planned for dementia care costs, while 50% know someone living with dementia, or caring for someone who has dementia.

Many people are alert to dementia warning signs, with 43% of those surveyed regularly checking themselves for symptoms. Financial planning matters too. Putting the right things in place now can make life easier for everyone later.

The good news is that there are positive, practical steps you can take now. Planning ahead supports the people you care about, reduces pressure on family members, and gives everyone more choice if care or extra support is needed later.

Why it matters

Almost half the people surveyed have not planned for possible dementia care costs. This matters whether you are thinking about your own future, supporting older parents, or helping other family members make sensible plans.

Alzheimer’s Society estimates that the total cost of dementia in the UK is around £42 billion a year and could rise to £90 billion by 2040. It also estimates that 63% of these costs are met by people with dementia and their families. That is why early conversations, good legal documents and joined-up financial planning can make such a difference.

Care costs can vary widely

There is no single figure that applies to every family. Costs depend on the level of support needed, where someone lives, whether care is provided at home or in a care setting, and what help may be available from the local authority or NHS.

Alzheimer’s Society has estimated average annual costs of around £28,700 for mild dementia, £42,900 for moderate dementia, and £80,500 for severe dementia. These figures include the wider cost of care and support, including unpaid care from family members. They are not a prediction of what any one person will pay, but they do show why having options matters.

What you can do now

1. Get the right legal documents in place. A will and lasting powers of attorney can make life much easier for your family if they ever need to help with decisions. There are two types of lasting power of attorney in England and Wales: one for property and financial affairs, and one for health and welfare. Age UK explains that setting one up in advance can make things much easier if someone can no longer make decisions for themselves. Your Aetas adviser can also help you understand how these documents fit into your wider financial plan.

2. Make money admin easier. Most of us dislike admin, but small actions can make a big difference. Keep important paperwork in one place. Make sure trusted people know where to find key documents. Set up direct debits for regular bills. Check whether bank accounts, pensions and benefits are organised in a practical way. These simple steps can help if you, or someone you love, is living with dementia in later life.

3. Understand how care could be paid for. Dementia care is not automatically free. Alzheimer’s Society explains that, in England, a local authority needs a financial assessment to help them decide what support someone may receive and what they may need to contribute. NHS continuing healthcare may also be available for some people with long-term complex health needs, although eligibility depends on assessed needs rather than a diagnosis alone.

4. Make your money work as hard as possible. Care planning is not just about setting money aside. It is about checking whether pensions, savings, investments, protection and income are set up in a way that gives you flexibility. For some families, that may mean reviewing investment strategy, retirement income, tax allowances, property, protection or the balance between access and long-term growth. Your Aetas financial adviser can help you and your family assess this. Together, you can map different scenarios in our cashflow planner so you can see your options more clearly.

5. Look at the bigger estate planning picture. Dementia planning often links closely with inheritance tax, trusts, wills and family wealth planning. The right approach depends on your circumstances. Reviewing these areas together can help make your wishes clear and your family better prepared. This can also be a good time to review whether your current arrangements still reflect your wishes.

6. Start the family conversation early. These conversations do not have to be gloomy. They can simply be about what matters to you, what your parents or loved ones would want, who should be involved, and how decisions should be made. Talking early gives everyone more time, more choice, more confidence and less anxiety.

Planning is not about expecting the worst

Thinking about dementia and later-life care can feel difficult, especially when it involves parents or other loved ones. But thinking ahead is not about expecting the worst. It is about giving your family options, reducing uncertainty and making sure the right people can step in if support is ever needed.

Having the right legal documents, clear records and a flexible financial plan can help families act quickly and calmly. It can also reduce the risk of rushed decisions, financial pressure or confusion at a stressful time.

How we can help you – and your family

If you are concerned about how dementia could affect you, your parents or your wider family, Aetas can help you look at the bigger picture. Our advisers can help you bring together retirement planning, pensions, investments, tax planning, inheritance tax, trusts, wills, lasting powers of attorney and family wealth planning. Where specialist support is needed, we can also work with trusted specialists in areas such as wills, estate planning and legal advice.

A conversation now can give you and your family more clarity, more confidence and more control over what happens next.

Frequently asked questions

How much does dementia care cost in the UK?
Costs vary widely, but Alzheimer’s Society has estimated average annual costs of around £28,700 for mild dementia, £42,900 for moderate dementia and £80,500 for severe dementia.

Is dementia care free in England?
Dementia care is not automatically free. Local authorities usually carry out a financial assessment to decide what support someone may receive and what they may need to contribute.

Why is a lasting power of attorney important for dementia planning?
A lasting power of attorney allows trusted people to help make decisions if someone can no longer make them for themselves.

How can financial planning help with dementia care costs?
Financial planning can help families understand their options, organise pensions, savings and investments, and prepare for possible care needs.

Have you thought about how dementia could affect you or the people you love?