Figures suggest the average cost of a care home is on the rise. While it can be difficult to consider, some people will need care in their later years and making it part of your long-term plan could provide greater security.
Of course, you hope you can enjoy your later years in good health and continue to live independently. Yet, if you need additional support, having a plan in place may mean you’re more comfortable and don’t need to worry about the financial implications.
The average nursing care home costs more than £60,000 a year
According to interactive investor, the average cost of a care home has increased by 10% when compared to 2022. In fact, an average nursing home will now set you back £1,176 a week or a staggering £61,152 a year.
In many cases, you will need to contribute to at least a portion of your own care costs. So, understanding the potential outgoings and making it part of your financial plan may be useful.
There is a government plan to introduce a lifetime cap on care costs in the future. The proposal suggests a cap of £86,000. However, it’s important to note that this cap would only cover care costs, not expenses like accommodation, utility bills, or entertainment. So, even if the government implements the cap, you may still face a bill that exceeds this limit from a care home.
Interestingly, a report from Just Group indicated that many people would prefer not to move into a care home.
Among over-75s, just 29% said they would be happy to go to a care home if needed. Instead, they’d prefer to receive care in their own home. Depending on your circumstances and health, this may be possible, but it isn’t without cost.
You may still need to pay for care services to help with activities you struggle with, such as cleaning your home or preparing meals. So, even if you’d prefer to remain in your home, creating a care plan is important. It could provide you with more flexibility to choose the type of support that might allow you to continue living independently.
5 essential steps to take when you’re creating a care plan
1. Set out your preferences
A care plan should be tailored to your wishes. So, setting out your preferences could be useful – how do you feel about moving into a care home? Would you be comfortable with a care worker visiting your own home?
As things like health may affect what’s suitable for you, considering different scenarios may help you create a practical plan.
As well as the type of care you’d prefer, consider specific details too. For example, if you were to move into a care home, are there facilities or activities you’d like the home to provide? Or is remaining in the local area important to you?
2. Speak to loved ones about the support they could offer
If you want to remain living independently, you may need additional support in your later years. This could come from a professional service or your loved ones.
While loved ones may want to offer support, would it be realistic considering other commitments they may have, such as work or looking after children? Having a conversation with your family about your wishes could be useful and help you understand what support they may be able to provide.
You may also want to consider if relying on care from your family is something you’d want. According to the Just Group survey, almost 7 in 10 over-75s don’t want their children to have to care for them. More than half of over-45s said the same.
Understanding the support your family may provide could help you calculate potential costs for professional care that’s provided in your home if it’s needed.
3. Calculate the cost of your care preferences
With your preferences set out, you can start to understand the potential cost of care.
While the average figures offer a useful guideline, prices can vary significantly depending on your location and the type of care you want. So, researching providers in your area could deliver the information you need to create an accurate plan that reflects you.
4. Consider which assets you’d use to pay for care
Your care fund doesn’t need to be a lump sum of cash. Depending on your circumstances, other assets or a combination of assets could make more sense.
Financial planning can help you understand the value of your assets and how they may change during your lifetime. A plan that’s tailored to you will consider which assets you could deplete to pay for care if you need it. Understanding how certain assets could pay for care may provide peace of mind and mean you feel more confident making care decisions.
Please contact us to talk about making care part of your financial plan.
5. Decide what you’d like to happen to your care fund if it’s not needed
A care fund is there to provide you with security if you do need support later in life. But, if you don’t need to use it, who would you like to benefit from it? You may want to split the fund between your children with other inherited assets. Or maybe you want it to go to your partner so it could pay for their care if necessary.
Your care fund should be considered as part of your wider estate plan and included in your will.
Make potential care costs part of your financial plan
Care could potentially be a large expense in your later years. Making it part of your wider financial plan could give you confidence in the future and provide you with greater security. Please get in touch to discuss what steps you could take to make care part of your long-term plan.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning or will writing.