Start to prepare for your care
Your Money isn’t renowned for its jollity. To be fair, its job is to offer sage financial advice, not bring a weekly dose of wit into your lives, but sometimes the topic covered almost seems designed to make you wonder how you’ll cope.
This week’s subject, care of the elderly, falls firmly into that category. With most of us apparently not having enough money in the pot for a decent standard of living after retirement, and the retirement age itself moving relentlessly higher, old age doesn’t seem like a bundle of joy at the moment.
Nonetheless, paying for care for ourselves or a loved one at some point is a very real possibility, which is why a recent survey from Key Retirement Solutions, the equity release specialist, showing that nearly half of over-65s do not know how much they need to pay for such care, is a real worry.
Apparently, 35% believe there is a cap on long-term care costs of £20,000. In fact, anyone in England who has assets of more than £23,250 has to fund all their own care. This figure could well change. Recent proposals have suggested a cap on care costs of anywhere between £35,000 and £60,000.
To put these figures into a ‘real life’ scenario, it’s estimated that around 20,000 pensioners a year have to sell their homes to pay for care.
In any event, there’s a good chance that it’s going to cost. Particularly as recent figures from the Department of Health suggest we’re all living longer, although not necessarily more healthily.
So what is to be done? Much like pensions, this is an issue that most of us seem happy to ignore and the Government isn’t rushing to help as there’s not a huge amount of spare cash around at the moment.
At the moment, anyone with assets of more than £23,250 gets no help towards care costs. Those with savings under £13,000 get free care and between those figures there are various levels of contribution. Normally, these assets include the house, but in some cases, for example if an elderly relative is still living in the property, or if the care needs are likely to be temporary, the house is not taken into account.
If your home is part of your assets and is needed to pay for care, it doesn’t necessarily mean it has to be sold immediately. You can ask for a legal charge to be put on the property, which means the council pays for the care and then recoups it against the sale of the house later. This is particularly useful if property prices are on the rise.
Anyone wanting care needs to start off by having a health assessment and from that the local authority will give you a figure of how much they are prepared to pay for your care.
The next step is to be financially assessed.
Once these two steps have been completed, you should know what care you’ll need and how much you’re going to have to pay for it.
If the care required is substantial, it’s possible that the NHS might pay for it all, under a scheme called NHS continuing care. If that isn’t the case now, then you can ask for a reassessment at a later date if health declines.
Make sure you claim the correct benefits. If you’re paying for your own care, you should still be entitled to attendance allowance and disability living allowance. If in doubt, ask!
One other option is to buy a long-term care annuity. These can be very expensive but do guarantee a monthly fee for life.
However you pay for it, elderly care is likely to prove costly. It’s very important you factor it in to your plans to survive retirement financially.
10 things you need to know
Far too many of us don’t budget for our care when we get older.
Currently, anyone with assets of more than £23,250 has to pay 100% of the costs.
Those with savings of under £13,000 have all their care costs paid for.
Around 20,000 pensioners a year have to sell their homes to pay for care.
Houses are not included in assets if there is still an elderly relative in the property.
Houses are not included in assets if the care requirements are likely to be temporary.
If care needs are severe, the NHS might pick up all of the costs.
Make sure you claim all your benefits.
Buying an annuity is an option, but can be expensive.
Care, along with pensions, needs to be factored in to your retirement equation as early as possible.
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