Care Home Fees Planning Mistakes To Avoid

Care Home Fees Planning – Are You Making These Mistakes?

Getting older is a fact of life, but it’s one we often find hard to come to terms with. Whether we’re thinking about what the future holds for ourselves or our parents and other friends and family we care about, it can be uncomfortable. And uncomfortable thoughts and discussions are often avoided!

There’s a problem with avoiding discussing the very real possibility of most people needing some form of social care in the future. As we get older our minds and bodies become less able, and we need more help. This means most of us will need either help at home or residential care. This burden falls to individuals and the state - and comes at a cost.

Social care – planning for the expected

If you anticipate something you can plan for it. Brand new cars don’t stay brand new forever. Use them and they’ll slowly start to show signs of age. We don’t buy a new car and expect it to last as it is forever. We plan for when it starts to show signs of age. We put money aside because we have a good idea of how much we will need. We think about how we will deal with problems as and when they arise.

We’re not cars. We can’t be replaced every two years or as soon as there’s an issue. However, we can plan our finances knowing there are likely to be future costs associated with aging. It might mean a few uncomfortable conversations need to be had sooner, rather than later. However, the alternative – no or not enough money available for essential care for ourselves or our loved ones when it’s needed – will be more uncomfortable.

The real costs of home care and care homes

Many people wrongly assume the state will cover the costs of care for the elderly. While the state can contribute to care costs, the amount available will depend on where you live, how much you have in savings, and medical need. Local authorities will only pay a standard rate so you may need to ‘top up’ the cost of care. In England, people with savings of more than £23,250, or who own their own home and are moving into residential care are not entitled to funding.

As we live for longer, we can expect the amount of time people spend being cared for to rise too. Savings can be depleted very quickly so it makes sense to plan to minimise costs and nasty surprises.

The risks of not planning for social care costs

Having to suddenly find thousands of pounds to help fund care for elderly relatives can put a lot of strain on families. Financial wellbeing and mental health are closely linked, and money worries can also damage relationships. Costs can eat away at inheritances: it’s not just inheritance tax that influences how much people have left over to pass on.

In some cases, people are forced to sell their family homes to pay care fees. At times when there may already be a lot of emotional and logistical stress to deal with, adding this kind of financial pressure is not ideal.

How does social care get funded?

There are various ways people fund the costs of residential care and care at home. Each of these will depend on certain circumstances being met, the finances available, and forward planning.

Options for funding the costs of care:

• NHS funding (for very specific circumstances)
• Local authority support (capped by authority/location)
• Self-funding:

• Savings
• Equity release*
• Care annuities and other financial products
• Pensions and investments income

It is important to understand what financial help you are likely to be entitled to and how you will expect to make up any shortfall. It is vital to be realistic in your expectations and start planning as soon as you can. This way you are likely to take the path that leads to the best and most affordable solutions.

How a financial adviser can help with care-fees planning

A financial adviser will look at your circumstances and what you hope to achieve. Maybe careful tax planning would be helpful, or perhaps you need to review your pensions with new goals in mind. There’s no one-size-fits-all answer to care fees planning, but you can avoid the common mistakes.

At Paula Bicknell Wealth we’ll sit down with you and ask you all the questions we need to answer before we can begin to advise you on the right course for you.

What can you do to lessen the care-fees burden?

1. Start planning early

Make sure you are budgeting appropriately, structuring any assets in a way that will help you long term, and exploring your options as soon as possible.

1. Use expert advice

Navigating legal and financial frameworks can be difficult without the right help and advice. Make sure you have the advice of an expert.

1. Work with the end in mind

Sit down with your family to make sure everyone is on the same page with goals for care standards and future legacies.

What should you do straight away for care-fee planning?

• Take action as soon as you can. Firstly, although it might be difficult, it’s important to have those tricky conversations with family members. Talk to your relatives about what you would like to happen for you. If necessary, address the subject of future social-care needs that friends and relatives might have, particularly if they have been resistant and it’s becoming a problem.
• Review your current finances and future goals so you can start to see how realistic your expectations are – and what you’ll need to do to achieve those goals.
• Speak to a reputable, qualified financial adviser. At Paula Bicknell Wealth we work through your options and likely outcomes with you. You get peace of mind that you are working to a plan to help you and your loved ones move towards a more secure future.

With preparation you can plan to maintain your security, control, and dignity. Make sure you contact us before care fees become an issue. Our offices are in Theale, Reading, if you would like to speak to us in person. We are also available for online meetings, wherever you are in the country. Get in touch!

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

*This is a lifetime mortgage. To understand the features and risks associated with this type of mortgage, please ask for a personalised illustration.

Advice in this areas may involve a referral to Karehero, a care navigator and matching service provider, whose services are separate and distinct to those offered by St. James's Place.

Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.