28 Oct How should people plan for long-term care?
Making a plan to protect your loved one in the years to come will allow them to continue enjoying the best quality of life – and offers you peace of mind during an otherwise challenging time.
Like sorting out a pension, planning for care early means more certainty about the years ahead. If you have a relative or loved one that you believe may one day require long-term care, the time to act is now.
Where to start in planning for long-term social care?
The social care system is notoriously complex as it’s needs-based. But it’s still possible to identify the main areas of care that you may need to fund.
- Residential care home support
- Nursing home support
- Live-in home care
- Assistance at home
The need for care can become apparent over time. For example, your fiercely independent mum in her 80s could start to struggle around the home physically with tasks such as cooking and getting dressed.
You may be suddenly called to an incident where an elderly parent has started a kitchen fire forgetting they had put the hob on, as a rapid decline in mental health takes hold.
If you find that you are needing care for a relative who is living with dementia or Alzheimer’s it is important to seek specific help as soon as you can, such as through Dementia UK.
With time on your side, it’s worth reading up on your options and taking the time to understand your financial situation.
You can also choose to seek advice from a qualified professional who offers specialist financial advice for social care, such as at HWIFM.
How will you fund long-term social care?
There is no avoiding it, many horror stories around funding social care for loved ones focus on people losing their homes and their savings.
This is devastating for the person receiving the care and their family alike, as they watch the social care system eat away at hard-earned assets.
Many people don’t give social care costs a thought until they need them. When the need for urgent care strikes, making savvy financial decisions can be extremely difficult.
Anyone with savings or assets worth more than £23,250 in England will not have their funding met. The average cost of residential care in the UK is more than £700 a week. It’s worth noting that in 2023, an £86,000 cap on care liabilities will be introduced which should ease the burden slightly, but it will not solve the challenge of individual funding for care.
Even with income from pensions, this could leave an annual shortfall of thousands of pounds. So how can this situation be avoided?
Immediate care annuity
Immediate care annuities, also known as care fees payment plans, are lump sum investments that will cover the cost of any care needed for someone until the end of their life. This is the case unless care fees increase by more than the income, or the annuity is set up to only cover part of the fees (otherwise known as a shortfall).
They are often purchased by the family member(s) of someone who is likely to need care in the near future, particularly if that person is much older or unable to manage big financial decisions.
Taking into account factors such as age, weight and health of the person, the ultimate benefit of immediate care annuities is that, in most cases, they will ensure all care needs are met.
Check what you are entitled to
It can be too easy to just assume that you will not be entitled to any support on account of the amount of savings that you have.
This is not necessarily the case as many people needing care do still qualify for an attendance allowance. This offers support to people who want to stay at home to retain their independence.
In Government plans due to be brought into force in October 2023, a cap on care costs of £86,000 is planned for those self-funding care. Although this does not include living costs such as food and accommodation. Higher capital limits are also being introduced in 2023, which is worth being aware of.
Look ahead financially
To ensure that they are able to pass on their savings as they wished, many people choose to ‘gift’ money.
This helps to avoid life savings being swallowed up in care fees, although it’s important that this is handled correctly to avoid being classed as ‘deliberate deprivation of assets’.
If an adequate care plan has already been put in place that will take away the need to draw on savings that were intended to be passed down.
Alternative options for covering social care costs
There are alternative methods to meet the costs of care, which could allow you to also look to the future with a sense of security.
If you have a large amount of savings to draw on, this may be more than adequate to meet the cost of any care required. Ideally, you would need three years of care costs in capital.
Likewise, if you have invested in property, you may be able to cash in on your investment or meet the costs with rent. It is important in this case to make sure that the rent will continue to cover steep rises in social care.
When selling a home to meet social care, it is also important to factor in the state of the housing market and the time that a sale could take.
Of course, long-term care may not be needed. Not everyone becomes infirm or mentally frail, and many illnesses can be short; meaning the need for sustained social care funding is not there. Again, there is no way of knowing.
Seek professional financial advice
The first step to take when planning for long-term social care is to take professional financial advice.
While we all want the best for our families, knowing that you can fund that is essential.
HWIFM is a member of Symponia, an organisation to bring together financial advisors with social care funding knowledge.
By talking to one of our advisors you will get a full picture of where you stand financially when planning for the future of your loved ones. This includes the benefits you are entitled to, the best way to invest your money, and how to guarantee the level of care that you want.
Get in touch today to take the first step in securing your future.