We’re all living much longer and more active lives, but an ageing population means many of us will eventually need some form of care, often in a residential home.
According to the most recent figures available from the Office for National Statistics (ONS), some 291,000 people aged 65 and over were living in care homes in England and Wales in 2011.
In this part of the world this type of care can be hugely expensive – anywhere between £50-60,000 a year is the norm now – and comes with the added uncertainty of not knowing how long you’re going to live.
Did you know that the chances of a person dying in the first 12 months of going into a care home are about 10%, which happens to be the same as surviving for eight years?
This isn’t a very cheery statistic, but it underlines the stark reality of funding your care and the dilemma of how you’re going to pay for it. You need to ask: “Will I need £50,000 or £400,000, ignoring inflation, to cover the cost?”
In my view going into a care home and starting to pay that amount of money without taking financial advice is just nuts. It’s a huge financial decision to make and you’re potentially in your mid-80s.
However, there is a way you can address this uncertainty by purchasing what’s known as an immediate care plan, also known as an immediate needs annuity, which is taken out at the point of requiring care.
Each policy is individually underwritten to establish the cost and once in place pays the difference between your income and the amount of money you need for care fees for the rest of your life.
What you’re doing is squaring away your future liability by party with a lump sum now. Obviously, you could die tomorrow, and that money is gone for good, but equally you might live for eight years or longer.
Our key message to people who find themselves facing the prospect of privately funding their care is that you should at least get a quote for such a policy.
Until you’ve done this it’s difficult to decide whether you should buy such a policy or take the risk and pay the care fees as you go along.
At Time Financial Planning we charge a fixed fee for producing a report which details what we think is the best way for you to fund your care.
We’ll give you a range of quotes to help you decide. It may be that you want one that escalates by the inflation rate or perhaps one that builds in some form of protection so that if you die sooner than expected your estate gets a refund or partial refund.
One of the problems that I encounter time and time again is that care homes and local authorities don’t signpost people towards financial advisers at exactly the time they need professional advice.
They simply say: “No, you’ve got more assets than the means-tested threshold so you’re on your own sunshine, you’ve got to pay it yourself.”
So, it’s no wonder people are worried about running out of money because they never get told to talk to a financial adviser who’s qualified in this area.
If you’d like to discuss this, or any of your financial needs, please contact Tim Embleton on 0118 327 9895 or email: info@tfp.limited
TIM EMBLETON
Time Financial Planning Limited is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority.
