Factoring potential care costs into your financial plans for the future
It’s a well-known fact that the UK population is getting older. According to ONS data1, the number of UK residents aged 65 and over will hit 24% by 2042, up from 18% in 2016. As life expectancy rises, then, it’s advisable to consider your potential long term care needs when planning your finances for the future.
The support you may be entitled to varies across the UK.
In England and Northern Ireland, any funding is currently based on the following capital limits:
The capital limits differ in Scotland, as shown below:
If you live in Wales, a capital limit of £24,000 applies to non-residential care, and a limit of £50,000 applies if you need to have residential care. You will also be expected to contribute all your income in excess of £28.50 per week (the PEA).
When a local authority performs a means test, most of your assets and savings are treated as capital but your home is excluded under the following circumstances:
The local authority is entitled to question whether or not you have transferred your property specifically to avoid it being included in the means test. There is no time limit for this.
Costs vary greatly according to a wide range of circumstances – for instance, whether you receive at-home or residential care, as well as the level of support you require.
A 2018 study by healthcare experts LaingBuisson2 shines a light on the estimated cost of care, which can range from:
Remember, these estimated figures don’t include ‘extras’ such as trips out, haircuts, etc., so make sure you understand exactly what the care fees cover.
The Care Act, passed in 2014, proposed a £72,000 cap on care costs which was set to be introduced in 2016. However, the introduction of the cap was suspended pending the publication of a government Green Paper discussing the issue.
Our advisers can assist you in planning for the potential expense of long-term care, tailoring our advice to your individual circumstances.
We can advise on the various funding solutions available to you, from purchasing an annuity (lifetime income) or raising capital through equity release, to planning ahead by making investments that can pay an income to fund your care. You could use one of these options, or a combination of all three.
If you’re facing the prospect of paying for your, or a loved one’s, care, then let us help you make the best choices. Just get in touch.
The value of investments may fall as well as rise. You may get back less than you originally invested.
Think carefully before securing other debts against your home. Equity released from your home will be secured against it. To understand the features and risks, ask for a personalised illustration.