January 18, 2024
With the festive season well and truly behind us, we hope you’ve been enjoying our pointers towards looking after your financial health in 2024.
Many of our clients are concerned about the cost of care in later life, although it’s a topic that comes up less frequently than it should. However, on the back of family gatherings and the dawn of a new year, perhaps we all think more about the passage of time?
A short while before Christmas, the Care Report 2023 from the Just Group landed in our inbox. It’s a thought-provoking piece, and here we share some of the key take-outs with you.
It’s not a particularly pretty picture, sadly. Late 2023 was supposed to bring in a new era in care funding, with a cap on care costs and more generous limits on means-testing. However, the changes have now been pushed back until at least 2025.
Where does that leave us, and what do people think about care provision?
If you’ve ever needed to arrange care, either for yourself or a loved one, it will come as no surprise to learn that, overwhelmingly, people agreed that the care system is complex (73%), that care is expensive (83%) and that State-provided financial support is inadequate (65%).
Many people go through life paying little attention to the care system, other than when they need it. A great many only begin to look into it when an immediate need arises – often suddenly – as a result of an elderly relative being injured, becoming sick, or suffering from a condition like dementia. Whatever the reason, many of us first engage with the system for adult social care in a situation where decisions need to be made quickly.
Whilst the complexities of the care system have a great many implications, we’re going to focus on the financial picture.
If someone needs care, their local authority will undertake a care needs assessment. This includes a financial assessment (or means-test) that takes into account income and capital.
The current capital threshold lower limit (below which eligible care needs are state-funded) is £14,250. The upper limit (above which you must pay your own care costs) is £23,250. Between these limits, state funding is reduced the higher you get. Whether or not the value of your home is taken into account depends on your circumstances, including whether it remains the home of a partner or dependent.
Even if you have quite modest savings, investments or income, the presumption should be that you will need to fund your own care. So, how do people plan to fund their care?
As you can see, there are a number of ways in which people expect to pay for their care. A matter for concern, though, is the number of people who don’t know, and the number of people who haven’t made any specific provision.
Selling your house to pay for your care, using your savings/investments, or using your pension are the three most common ways that people expect to pay for later-life care, if they’ve thought about it at all.
Whatever approach you take will have pros and cons, and implications for other areas of your financial planning. Your financial adviser can help you work through what is most suitable for you and any recommended actions to take now.
If you are currently looking at immediate or imminent care needs for yourself or a loved one, the initial step is to ensure those needs are evaluated. Consider what level of support is required, such as medical support, personal care and help with household tasks. You’ll need to consider specific health conditions or limitations.
If you’re planning ahead, this will be a little more difficult to be specific about, but your adviser will discuss scenarios with you, to enable you to get a good idea of what your needs might be.
Look into the options and resources available for home-based or residential care. The options are numerous, and you’ll need to consider whether adaptations to your home would help. You can also find information about numerous community support services, many of which are designed to provide support for specific conditions, e.g. Parkinson’s or dementia.
If you have an immediate need, you’ll also be developing a care plan. This might be with your GP, hospital or a care coordinator.
Once you know what you need, you can start looking at the financial implications. Consider the costs involved with hiring carers or nursing support, buying any necessary equipment, modifications to your home, and other ongoing medical expenses.
Depending on your current position, you may be able to put in place long-term care insurance. Consulting your IFA is important at this point, as they will be able to look into the options available to you.
Communicating openly with your family or close friends is important, though many people find it challenging. But involving them in your decisions and making them aware of your plans can reap rewards. You may find that family members are willing to offer support in unexpected ways.
If you are facing significant health challenges, it is also worth thinking about giving power of attorney to someone you trust, so that they can make decisions on your behalf if you are unable to do so later on. In the UK, there are two types of Power of Attorney, one covering health and welfare, and the other dealing with property and financial affairs. If you don’t have a friend or family member who you can appoint as your attorney, it is possible to have a solicitor act for you instead.
At Talis IFA, our experienced team can help you incorporate later-life care into your financial plan. It is about more than the numbers. By getting to know you and your aspirations for later life, we can work with you to build a plan which ensures your finances will work for you when you need it most.
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