In Focus: Retirement Income  

Lack of planning threatens care provision

However, while the Care Act 2014 has put a duty on local authorities to make information available to ensure people are aware of the options that may be available to them, in practice this information may be limited, or may simply signpost individuals to generic materials that are not tailor-made for the particular person or their circumstances.

Similarly, those who search for information online are unlikely to find all the information they need, and there is no guarantee that what they do find is current or accurate.

Finally, there is the cost. Care is expensive and, in the past 10 years, prices have increased considerably faster than RPI.

FTA: What is the average cost for a care advisory service?

DN: It can vary. For example, at Grace, we supply many families with advice across different price brackets and our services are available to many of the UK’s leading financial providers.

Packages range from £295 to £2,450. However, investors in Ingenious Estate Planning benefit from our most comprehensive service, for themselves and their families, at no cost.

FTA: How can people deal with these challenges, given care funding usually has to come out of their pension pot?

DN: The need for care is becoming one of the sad realities of modern living. The real challenge is turning this reality into a positive experience, not something that is bolted onto life in an emergency.

The best way to achieve this is through forward planning and preparation. There are two main areas people should prepare for:

1) Financial preparation.

It is important to understand the funding provided by the state when it comes to care.

Most funding is means-tested and in England, for example, local authorities do not typically provide financial assistance for anyone with capital over £23,250 (and if you’re looking for residential care, this will include the value of your home if you live there alone).

There is some non-means tested support available in certain circumstances, but it is limited.

Assuming your clients have assets over £23,250, they will probably be liable for the full cost of their care, so how much should they expect this to be?

Care options vary hugely of course, from assisted living to care at home and residential care, but to give you an idea, two hours of care at home per day could cost around £18,000 per year and residential care can cost more than £65,000 annually.

This means financial preparation for care needs to be considered early on and not just by the elderly. And importantly, people need to retain access to their money.