Nobody relishes the idea of very old age. For some, it will eventually mean moving into long-term care. Sadly, whether care happens at home or in a care-home, many people will have to contribute towards the cost of their own care, and some will have to pay for it completely.
How much money will I need?
The cost to you of long-term care depends on your health, what level of support you need and the value of your savings, assets and income. You may have to pay for all of it, some of it or nothing at all – the NHS may provide your care, depending on your circumstances.
The UK average cost for a one-year, single room stay in a nursing care home was £43,940 for the financial year 2016-17. It’s therefore really important that if you or a loved one needs care, you explore the options available to you for funding it.
Find out if I’ll get help with those costs?
Talk to your local authority about long-term care funding, and what they have available to support you. They’ll be able to provide you with information and advice, assess your care and support needs.
Your savings will affect long-term care funding?
For the tax year 2018/19, if you have savings and assets that are worth more than £23,250 in England, £24,000 for Wales (non-residential care, £40,000 for residential care) and £27,250 in Scotland, then you’ll have to pay for your own care.
If you are lucky you will have sufficient income to cover the cost of care, however for lots it will be a case of using existing capital, it may also require you to sell your home.
With interest rates continuing to be very low, having money on deposit and drawing from it to pay the care fees is a recipe for quick erosion with the likelihood of running out far too quickly. One option is to purchase a care funding plan.
What is a care funding plan?
A care funding plan is designed to give you peace of mind for the future – knowing that you have made arrangements to help pay for your future costs of care.
It’s a financial product that provides an income for life – to help you avoid running out of money. Care plans are bought with a lump sum, and are non-refundable. The income is normally paid direct to your registered care provider – if paid in this way it will benefit from favourable tax treatment.
Why would you want to buy a care funding plan?
A care funding plan may be suitable for you if you’re already in a care home, you’re about to move into one, or you’re receiving care at home – and you want to be sure there’s a regular income that’s guaranteed to pay towards the cost of your care for the remainder of your life.
How much do care funding plans cost?
The amount you’ll need to contribute will depend on your own personal circumstances, for example, how much income you’d like to secure, your age, the state of your health and your life expectancy.
How do you buy a care funding plan?
You’ll need to talk to a professional financial adviser first and foremost as there’s a lot to think about when setting up a care funding plan. When you start thinking about state benefits, savings, income from pensions and investments, your outgoings, emergency money, the cost of care in itself, there’s so much to think about, that it really does pay to get professional advice.
What will a professional adviser do for me?
A professional adviser will ask about your circumstances. They will have plenty of experience, looking for the bigger picture – taking into consideration all of the obvious things that could affect how much money you may need to cover your care needs, but also factoring in some of the things you may not think about.
A lot of information is needed at the initial meeting – things like details of your care costs, income, outgoings, assets and investments – and having this information to hand can help speed up this process.
They’ll also take you through all the care funding options available, Above all though, a professional adviser, working with you to set up a suitable plan, will give you the peace of mind that you are making the most of the money available.
So where do you find a professional adviser?
You can talk to your local authority. Alternatively, you’ll find an impartial listing of professional advisers in your local area on The PFS look specifically for those advisers who have experience arranging long-term care funding. Advisers that are accredited through the Society for Later Life Advisers (SOLLA) have not only obtained the right qualifications but they have also proved their ability to understand the wider issues for those going into care.