The most 'taboo' topic in all personal finance, even bigger than care, is the plight of dementia sufferers – most face catastrophic care costs.
A staggering 1.7mn people could be victims by 2040 according to a new UCL-led study.
In the UK 8.3mn individuals live alone, almost one in three households, but not all can rely on family if they are unlucky enough to be one of the 2mn adults who become frail or need care.
The one bright light in this dark care firmament, according to Stephen Lowe, director at Just Group, is the rise of advisers such as Eldercare and Matrix Capital, whose good practice encourages children of victims not only to make their own plans for later life early, but also to ensure their parents have a secure future now.
Who cares?
Virtually nobody plans for later life.
NHS services are free but care put in place by local councils is means tested. Local councils pay towards the cost of social care if your client has less than £23,250 in savings. Otherwise everything costs, from basic care at home to huge residential fees.
Nearly 300,000 people live in care homes, yet demand for products such as immediate care annuities to guarantee the care home rent is tiny at just £150mn a year, with only three insurers in this field: Aviva, Just and Legal and General.
The high cost of immediate care annuities puts off all but the wealthiest, but it may be worth it for peace of mind to know the resident has funds for life to meet his or her rent, no matter how long he or she lives.
Many languish on in care homes for years; a typical stay can be of three to four years at a cost of £1,000 per week (in England and Wales). At least, the estate to a certain extent is protected from almost unlimited ravages of care costs.
Every last penny spent
I am speaking with experience. No one really knows just how grim this bureaucratic quagmire is, that is until they have to grapple with it themselves. 'From the cradle to the grave' was the initial principle of our NHS. Sadly, social care was excluded.
If your clients are moderately wealthy, be prepared for almost every last penny of their savings to go on care.
My late father Frank Hawthorne (in later life himself a financial adviser) had to self-fund care at home at the end of his life. Just three visits a day used up his entire RAF pension, while the value of my late eldest sister Francine’s modest home was swallowed up by just two years’ residential care fees.
Social care is a frozen wasteland. Such is the glacial progress nothing has changed for the better since I first started writing on this subject 40 years ago. Even the Archbishop of Canterbury Justin Welby now calls it a “broken system”.
Indeed, Andrew Dilnot wrote a seminal report in 2011 advocating a care cap. Hugely praised at the time, it was left to rot in the proverbial long grass with its pages occasionally dusted down.
This Stygian nightmare is set to continue. With no money in the sector, despite excellent and dedicated staff, recruitment is grim, even associated with people trafficking, while pay, career ladders and promotions prospects are poor. Integration with health care is only a pipe dream in most cases.
Nothing, I am sure, will appear in the 2023 Autumn Statement – Jeremy Hunt (who should know better as the former health secretary) last year announced a delay in the funding reforms to at least October 2025.
But the thorny question is, who should pay? The individual or the state and if so, how much is too much?
Another influential report, Just's Care Report 2022 (now its 11th year of publication), senses the public mood.
According to its research, by and large house property should come into the equation – the equitable amount people feel is somewhere between 25 per cent and 50 per cent of the value of the home..
Tackle your MP, press the political parties on what their manifesto will contain on this issue that affects us all.And why should anyone (or even their advisers) advise people to plan for long-term care when everything could change in 2025? We may get a cap on care costs, or we may get a 'National Care Service' and free personal care (as Labour promised in 2019).
If you are over 65, or have a relative over 65, this concerns you. Tackle your MP, press the political parties on what their manifesto will contain on this issue that affects us all. We will all need some sort of care, even for a few weeks before we die.
Sadly, unlike the political consensus on pensions, there is none on social care. A sound and sensible policy could be a vote-winner but all too often in the past it has been a vote-loser – remember Theresa May and more recently Boris Johnson’s promising to sort out social care by 2025?
And the current social care abyss is the ultimate kick in the teeth for a brave generation that had their childhood ruined by war and rationing. It is just too complex, costly and controversial for any one party to handle.
I fear an all-party consensus solution is a distant prospect. The main parties continue to weaponise the NHS and social care crisis at general elections rather than put the nation first. Politicians need a nudge from us.
Stephanie Hawthorne is a freelance journalist
