Footing the bill
To what extent are people prepared – both emotionally and financially – to provide care for themselves or their families?
More of us than ever will come to need it. But few of us have any idea how we’ll pay for it. The growing cost of long-term care – and the strain that can come with providing support to elderly family members – is fast becoming one of the biggest challenges facing society today.
Understandably, moving into a care home can be an emotionally difficult time. One of the toughest challenges we all face is how to deal with change and how to make it as positive as we can for ourselves and those closest to us.
Unfortunately, there is no instruction manual for how families should work together to handle care-giving and the many practical and emotional issues that go with it. Anxieties are bound to arise, along with a level of stress that you might not have expected – often made worse by financial worries.
According to research by The Centre for the Modern Family1, almost half of people avoid thinking about potential care costs, while one in four admit that they have no idea how they would cover the costs for themselves or a relative.
The research also reveals the degree to which people expect to be reliant on their family for financial support in the future. Half of UK adults say they will have to rely on a relative to help them afford care fees, which currently cost an average of £866 per week.2
One in ten people who provide financial support to a loved one have been forced to make sacrifices, with a quarter of those individuals making major adjustments such as re-mortgaging their house.
“Our research shows that an over-reliance on relatives and the state could put families in serious financial difficulty,” says Jane Curtis, Chair of The Centre for the Modern Family. “It can seem difficult to know how to prepare for the future, but to avoid a financial care crisis we all need to have an honest discussion on later life care as early as possible so no one is left footing a bill they can’t afford.”
The study draws further attention to the need for individuals and families to anticipate future care needs and invest appropriately, or buy the right kind of financial protection. It recommends that saving for care “needs to become as inherent as paying off a mortgage, saving into a pension, putting money into an ISA, or making a will.”
Understandably, many of us will have misgivings about putting money aside for elderly care, especially if we have more immediate calls on our income. However, without a robust plan in place, it could fall to our families to make very expensive decisions at what could be an emotional time.
While equity release* or selling a property could free up the money needed, many people will view this as a last resort. That’s why it’s worth talking to a financial adviser. They will go through a fact-finding process with you to understand your needs and help you decide the most suitable approach.
If you end up having to pay fees yourself (called self-funding) and your capital reaches less than £23,250**, the local authority may assist with funding. However, it might still take some of your income if you’re below this limit. It’s therefore important to seek expert advice so that you know the rules.
A financial adviser will also help you to avoid making some common mistakes, such as ‘deliberate deprivation’ – when you are found to have purposefully given assets away to avoid these being included in the local authority’s financial assessment. Additionally, they will ensure you are receiving all the state benefits to which you are entitled.
“It’s clear that many people simply don’t understand the social care benefits and support system,” says Curtis. “Providing clarity and raising awareness of what is and isn’t available is critical to helping people prepare for the longer-term future.”
The report’s findings are also a good reminder of the need for people to talk with their relatives about their plans for the years ahead. Aspects concerning care, downsizing, wills and lasting powers of attorney are not always easy to approach, but they are vital if future decisions are to be based on a clear understanding of the recipient’s wishes. The sooner those conversations are had, the better.
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.
Will writing and powers of attorney involve the referral to a service that is separate and distinct to those offered by St. James's Place and are not regulated by the Financial Conduct Authority.
* To understand the features and risks associated with such products, please ask for a personalised illustration.
** England and Northern Ireland only.
1 'The financial and emotional impact of providing social care for family members', Centre for the Modern Family, August 2017.
2 Regional cost figures from Laing Buisson Care of Older People, including England, Wales, Northern Ireland and Scotland, May 2017.