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Why we need to plan and prepare for long-term care

We are more likely to be thinking about how to make our money work for us so we can enjoy a long and happy retirement, how we spend our 25% pension lump sum and how we preserve our hard earned money for our family or other beneficiaries, than we are on the possibility of us needing some sort of long term care in later life.

The fact remains that many more of us will require long term care because we are living-longer than previous generations, and as such, there is a higher likelihood that we could be spending some of those years in poor or declining health.

Findings from Age UK in its 2016 report Later Life in the UK revealed that there are 2.8 million older people with care related needs in the UK but nearly one million of them receive no formal support at all – in large part because of cuts to state funding.

Do you know who pays for long-term care if you should need it and what it costs? We find that the facts often surprise people. According to the Money Advice Service, the average cost of a residential care home place in the UK is about £28,500 a year, and £37,500 if nursing care is required. However, MAS takes its figures from a 2013/14 report. Others put the average figure for residential care at £39,000 a year – with nursing care costing significantly more.

Care comes in various forms, residential, nursing or someone coming to a person’s own home. All must be paid for and with local authorities funding being reduced, those authorities are looking to the individual to meet costs wherever possible.

Anyone going into care is means tested to see if or what they may have to pay. Currently, any capital and savings below £14,250 are disregarded in the means test. If you have between £14,250 and £23,250 in capital and savings and you are eligible for care, the council will contribute towards your care costs. If you have capital and savings above £23,250, you will have to fund all of your own social care.

In the Care Act 2014, the Government followed up on its pledge to cap care fees at £72,000 but then put implementation of the cap back until 2020. In any event, the £72,000 only covers care costs and not the costs of board and lodging. This is calculated at the rate that the local authority would pay for care, which is likely to be less than the full amount a care home would charge.

So, even when the cap comes in, people are going to be paying out for care for a lot longer than they may expect, as well as for their board and lodging.

In fact, the Institute of Actuaries estimates that only one in eight women and one in 12 men who go into a care home at the typical age of 85 will benefit from the cap.

Taking reasonable precautionary measures to cover the need for long-term care, is something we can help with. In our experience, taking action now always makes for an easier experience for the person involved and their families should the need arise.

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