Shifting the Retirement Narrative: The Strength and Growth of the IRC Sector, and What It Means for Your Clients

The growth of the retirement living sector signals much more than just a “nice story” for our industry. It demonstrates a surge in demand for high-quality later-life living, one which moves away from the tired tropes of care homes and nursing facilities.

Consequently, this altered outlook is generating an expectation from your clients that retirement living will form a key part of their financial planning, with a focus on wellbeing and fulfilment in later life.

A new narrative for discussing later-life living shifts the focus from care and old age to wellbeing and choice

Although awareness is growing and attitudes are changing, in some cases, advisors (and clients) can still think of retirement living as being primarily care-led, or a consideration for very late in life. However, according to Arco, IRCs are fast becoming the go-to living choice for older people, with retirees moving to them earlier than they have traditionally.

Their research discovered that:

– Terms like “old people’s home” are becoming outdated, as respondents resented them being presented as the only housing choice available for their future
– People are looking for new housing choices, including upmarket options with a range of lifestyle and care combinations
– The term “Integrated Retirement Community” appealed to their respondents as it reflects choice and a fresh future.

The change in rhetoric reflects the shift in expectation that later-life planning doesn’t have to mean exclusively preparing for old age and care.

IRCs offer a host of wellbeing benefits, socialising opportunities, and financial advantages, making them an appealing proposition to discuss with your clients.

According to the Centre for Ageing Better, 19% of England’s population is aged 65 and over. This figure is expected to rocket to 26% by 2065.

Clearly, housing options for this demographic need to keep pace, and there is evidence this is happening. Findings from Knight Frank in their UK Senior Housing Market Update show:

– 11% total growth in the supply of IRC homes over the last five years
– 3,247 IRC units built in 2024, within 43 schemes
– IRCs now represent half of all senior housing units, compared with less than a fifth in 2019.

All of that points to an industry which is growing in line with demand.

Conversations about retirement living form part of your role as mandated by the FCA

The FCA’s renewed focus on retirement brings the expectation that advisors will take a holistic, long-term view of retirement.

This means having meaningful, practical, and informative conversations with your clients about all retirement living options, extending beyond funding potential care and moving into the wellbeing sphere.

While there are clearly projected changes ahead for the UK IRC market, we are currently some way behind established markets like the US, Australia, and New Zealand. According to Arco, the US is leading the way in the market, with 6% of over 65s living in an IRC, while the figure stands at 0.6% in the UK. However, the figures indicate a dynamic and emerging sector, with opportunities for exciting growth ahead.

Talking to your clients about the wellbeing benefits associated with IRCs, as well as the financial opportunities, is vital

Arco’s report shows that, compared with traditional housing arrangements:

Owners and residents experience a 75% increase in exercise levels and a reduction in falls within two years
There is a reported 24% decrease in anxiety symptoms
Costs relating to GP, nurse, and hospital visits reduce by 38%
Average unplanned hospital stays drop from 8-14 days to 1-2 days.

The financial model of IRCs like Riverstone also presents a key topic for your client conversations. With many operating a deferred fee model, this can be an important part of their estate planning strategy.

The percentage fee is paid to the IRC upon death, which automatically removes it from the deceased’s estate and potentially reduces the amount of IHT the estate will attract. With the rapid expansion of IRCs expected in the near future, it’s clear that advisors need to factor these into client conversations.

Offering independence, social connections, wellbeing facilities, and potential tax benefits, IRCs are a compelling alternative to current later-living options.

Emphasising that later living doesn’t have to mean old age or nursing care is key. This is lifestyle planning with a strong focus on wellbeing, fulfilment, and quality of life.

To find out more, see: https://www.riverstoneliving.com/advisors