Residential Care; Planning for your Future
Even for people of working age, it is never too soon to start planning for the possibility that they may need residential care in the future. At the present time, one out of five people are expected to live until they are 100 years old and may need long-term care.
As many as a third of women and a quarter of men are likely to require care at some time during their life, so planning how this can be achieved is very important.
What Is the Cost of Residential Care?
In the UK, the average cost of residential care is about £28,000 a year, whilst nursing home care is more expensive at an estimated ?38,000. The average length of time people spend in a privately funded care home is over four years, so this could cost between £100,000 and £200,000.
At present, people who have assets of over £23,250 have to pay the total cost of their care, although this figure does not include your property if your partner or close relative is living in it. Although the Care Act 2014, which comes into force in April 2020, introduces a higher cap on care costs, until you reach this cap, you will be responsible for paying your care fees yourself.
Even when the eligible care services are funded by your local authority, you will still be expected to contribute towards accommodation. This means that although you will not have to spend every last penny on care, most of your savings could be used up this way.
In addition to the financial cost of care, relying on your local authority to pay for the care you need means that your choice can be severely limited. Rather than choosing a home you like that can provide the care you need and is conveniently situated, you may have to accept a place that is not ideal for your needs.
Planning for the Future
It is never too soon to start saving for the future, and your financial adviser will be able to recommend suitable products. Ordinary savings plans may be suitable for some people, allowing them to use their savings to pay for the long-term care they need in the home of their choice.
Some people buy an annuity with their savings to guarantee payment for care for as long as it is needed, but these are not suitable for everyone. The main disadvantage is that they can be very expensive and are only for the lifetime of the client, rather like an insurance policy, so you may not get the full value if you do not live for very long in care.
The advantage of purchasing an annuity is that you know the total cost of your care home fees are covered, however long you live.
Record Your Wishes
Many people think that their family will be able to care for them in their final years, but this is not always possible. You should ensure that they are aware of your wishes so that they are able to help you to choose a suitable home if the need arises.
Having sufficient savings means that you will be able to exercise choice; moving to a home close to your family and friends.