As we are tending to live longer, many more people need long term care. Sensible financial planning can help you to be prepared for these costs, so that you and your loved ones do not have to worry about being able to afford the care which you may need.
Why are long term care costs a problem?
LaingBuisson, a leading healthcare business intelligence provider, estimates that there are 430,000 older people in residential care and 130,000 enter residential care each year. In the UK, there are 1.5 million people aged over 85, but this is predicted to rise to 4.3 million by 2039. With growing demand, the costs are rising. According to Age UK care home places in the UK cost about £30,000 a year on average, and even for care-at-home, two hours of daily care averages at nearly £11,000 a year and varies greatly across the country.
How much will I need to pay for long term care?
Long term care costs can be met, either in full or in part, by a local authority or NHS if you qualify for support. Generally if your total assets are worth below £23,250 you will qualify for some support, but these limits vary outside England. Almost half of all people entering long term care have to self-fund the costs.
Costs can be significant, with the average stay in a care home being around two and a half years, but the longest stay has been over 20 years which would put a significant strain on the finances!
Long term care plans can be set up to pay a regular, tax-free income to the Registered Care Provider to help meet the costs of care. These plans can provide you with the reassurance that, if the need arises, they will provide the funds you require to meet these costs. Immediate care plans can also be used to protect your wealth. This is achieved by ensuring that the ongoing, often rising, cost of long term care continues to be met, even if needed over a longer period of time. By funding care from cash savings, there is the risk of seeing the value of your estate eroded and leaving nothing to your beneficiaries.
The Government continues to review the cost of care and the Chancellor, Phillip Hammond, has recently confirmed the current position:
“The Government is clear that everybody must have access to the care and support they need, but we are also clear that people should expect to continue to contribute to that care as part of preparations for later life.”
Long term carers
If you are already supporting parents or partners in long term care, it is important to know the services which are available. The NHS provides a useful guide to the care and support services and the financial support available.
Planning for long term care costs
Our advice process will:
• assess your wealth and assets, to see whether you will need to fund long-term care costs yourself or if you will benefit from state support;
• review your financial plans and assess your capacity to meet long term care costs;
• analyse your existing cash holdings and investments, and explore whether a long term care plan could help you.
It is always important to review your circumstances and our advice can provide you with recommended actions. A review is also very important if you are carrying out the instructions of an Enduring or Lasting Power of Attorney for an elderly person who requires care. A comprehensive review of the long term care options available will ensure that attorneys are meeting their legal responsibilities in dealing with the financial affairs of others.
The benefits of planning ahead and thinking about the possibility of long term care can reduce the worry of being able to afford the level of care you may need and want in the future – and looking after your finances is a key objective of our advice services.
Information contained within these communications was correct at the time of publishing. These news articles are for general information only and are not intended to be viewed as a personal recommendation. The value of investments and the income from it could go down as well as up. You may not get back what you invest. It is recommended that you seek competent professional advice, before taking any action.
CA4504 Exp: 01/2020