If you or a loved one needs elderly care, then there can be no doubt that you could be facing some very high ongoing costs. You might also need guidance on how the whole social care system works and how best to meet the fees involved with later life care.
The following funding information is provided by Autumna's trusted partners, Schroders Personal Wealth and Laterliving Now!
Laterliving Now! are experts in Equity Release products which can be one way of funding care at home.
Please be aware though, that most Equity Release products are not normally made available to individuals moving into Care Homes because generally the property on which they lend has to be owner-occupied. There are some rare exceptions though.
If you are considering ways to pay for home care or live-in care services, then Equity Release could be an option and this Laterliving Now! page has a simple interactive calculator to show you just how much cash could be released from your home with a Lifetime Mortgage.
Schroders Personal Wealth is a financial planning business and more. They are working to transform the industry and create a society where everyone sees the value of a great financial plan.
A large number of the Schroders Personal Wealth advisers have achieved the Later Life Adviser Acreditation. This is the industry standard of excellence for those advising the later life market. It is designed to give you the assurance that your adviser has the expertise to best understand your later life planning needs, and to provide advice that is right for you and, where they are involved, your family too.
Accredited advisers can advise on:
Schroders Personal Wealth offer a complimentary consultation with an adviser so they can learn more about you and your personal financial circumstances. To book yours please use this link.
Social care in the UK is means tested. If your assets are below the means test limit then you may be entitled to some funding from your Local Authority. If your assets are above the means test limit then you will have to meet the cost of any personal care yourself.
The means test limits do differ around the UK:
England: £23,250
Scotland: £28,000
Wales: £50,000
N. Ireland: £23,250
Even if you are paying for your own elderly care, then you may still be entitled to one or more State benefits.
There is a lower rate, currently £60 per week, for those who need help during the day or the night and a higher rate, currently £89.60 per week, for those needing help during both the day and the night.
You can request a claim form by calling 0800 731 0122. Payments will usually stop if you cease to be a self-funder. The system is different in Scotland.
You may even qualify for NHS Continuing Healthcare which is where all the care costs are paid for by the NHS.
To qualify for the latter, you would generally need to have a complex medical condition that is unpredictable, unstable and needs specialised nursing support.
The weekly amounts payable for the FNC are currently £187.60 in England, £87 per week for nursing care and/or £193.50 for personal care in Scotland, £179.97 in Wales and £100 in N. Ireland.
There are other scenarios when the property value is not included so do take advice from Schroders Personal Wealth about this.
During these 12 weeks, the Local Authority will make a contribution towards your care costs although you will still be expected to contribute some of your income.
Anything that they contribute does not have to be repaid.
Once the 12-week period has ended, you can ask for the Local Authority to lend you what you need to pay your care fees.
This is called a Deferred Payment Agreement (DPA) and can be very useful if you don’t want to sell your property – perhaps preferring to rent it out – or if it’s going to take some time to sell and you don’t have other savings to use.
Schroders Personal Wealth can give you more advice about how this scheme works.
The first thing to do is work out what the ‘shortfall’ is going to be between your annual care costs and the income that you receive each year. An Schroders Personal Wealth adviser can help you with this calculation if you are not sure exactly what to include.
At its most simple level, you can then divide this shortfall into the total value of your assets. For example:
Care costs £60,000 per year
Pensions & Attendance Allowance is £25,000 per year
Shortfall is £35,000 per year
Property sale proceeds/savings £175,000
So, £175,000/£35,000 = 5 years.
It would, however, be prudent to expect care costs to increase each year although this could partly be offset by interest on the savings as they are drawn down from, so the money may not last quite as long as 5 years.
We can help you with these calculations and forecasts.
In this example, the £175,000 could be held in cash deposits or other low risk investments but, in the event of 4 or 5 years spent in care, the money will all be gone.
Even with a larger capital sum, this ‘pay as you go’ approach carries risk in the event of longevity.
For anyone worried about their money running out or for those wanting to ‘ring-fence’ and protect an inheritance for their beneficiaries, a Care Fees Annuity could be worth consideration.
These are plans which have been specifically designed to take into account a person’s age and state of health so the income is much higher than you would get from a standard pension annuity.
The principle is that you pay a one-off lump sum to an Insurance Company and in return they pay a guaranteed, lifetime income which is tax-free if paid to a registered Care Provider.
The risk is that money paid could be lost if care is not needed for as long as the Insurance Company had predicted.
There are ways to reduce this potential loss, however, and a Schroders Personal Wealth adviser can explain these options to you.
These plans can’t be purchased in advance of care being needed but if you are looking for a ‘guide price’, as long as you know the person’s age and the likely ‘shortfall’ (i.e. income requirement) then the adviser can help with this.
"...you pay a one-off lump sum to an Insurance Company and in return they pay a guaranteed, lifetime income..."
Book your complimentary consultation with a Schroders Personal Wealth adviser by using this link.
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