Posted 18.11.2023
Paying for long-term care is a growing issue for many people in the UK and as life expectancy continues to lengthen, it is something that an ever-increasing proportion of the population will need to address.
In 2021, the NHS estimated that 24% of men and 28% of women aged 65 and over needed help with at least one daily living task [1], whether that need is met by paid carers, or unpaid. That’s around one in four [1]. Yet the current government funding available to meet the needs of elderly people is often unfair and unsustainable. Whilst the government can support some of the long-term care for those on lower incomes, the reality is that most of us will have to fund our own.
How much does care cost?
For a residential care home, the UK average for a basic level of care is around £60,340 a year. [2]Costs can also vary depending on the choice of care provider and nursing care is more expensive than residential care and care homes that offer specialist care, such as dementia care, tend to charge a higher fee.
Funding your own long-term care
There are a number of ways for you to fund your own long-term care. This article provides some options for you to consider, which you should discuss with your financial adviser to help you navigate the maze of paying for your care fees.
Care-needs assessment
Arranging care can be an emotional and confusing time, so speaking to one of our advisers who specialises in this field can provide peace of mind and security, as well as avoiding the possibility of not being able to sufficiently afford the care that you may need.
Our advisers will arrange for a care-needs assessment with your local authority, and it will first determine whether you qualify for local-authority care.
Set-up power of attorney
It’s worth setting up power of attorney as early as possible, in the event that you’re no longer able to manage your own affairs yourself (or if the loved-one you’re concerned about were to be in that situation). This allows your attorney to make decisions on your behalf about things like managing your bank accounts, paying bills, managing your pension and any investments you might have, or selling your home (and you can give specific instructions as to your wishes).
Long-term care should be part of retirement planning
It’s important to think about the potential need for long-term care as early as possible so that you can make plans accordingly.
You should therefore include long-term care planning as part of your retirement income strategy, making sure that you’ve factored in some of the potential costs of care (or a care home) in your retirement budget.
Your property assets
If you own a property, and live alone, you could consider renting it out and using the income to pay for your own care. This will mean you get to keep your property in your own estate and the house remains occupied (with all bills paid by the tenant) so that you don’t have to worry about it.
Alternatively, you could release some equity within the property, which can then be repaid from the sale of your home when you die (this option is often used by people who don’t need to leave their home and care is delivered at their own home).
Long-term care plan
Also known as Immediate Needs Annuities, these are specialist insurance plans designed to convert capital into income to help meet care fees. In return for a one-off lump sum you receive a guaranteed tax free income for life, provided that it is paid directly to the care home.
Looking after your current finances and the ability to plan for the long-term can have a dramatic effect on your ability to pay for the type of care or care home that you require. Contact our financial advisers today for further information.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
The Powers of Attorney involve the referral to a service that is separate and distinct to those offered by St. James’s Place and are not regulated by the Financial Conduct Authority.
[1] NHS Digital, 16 May 2023 – accessed August 2023
[2] Care Home Fees and Advice – accessed August 2023
