In an article by the Daily Telegraph at the end of 2014, they reported that a total of 350,000 older people live in residential care in England
Few things destroy family wealth more than paying heart-stopping care home fees, often totalling over £40,000 per annum in the South East, to ensure mum or dad see out their days in comfort.
The Government has its new social care regime that is intended to stop the forced sale of family homes to meet these costs. This will be followed by a cap on the total costs payable and is intended to allow money to cascade down through generations.
Forced sales are to be replaced by a secured loan, which will charge interest at close to commercial rates, and must be repaid. Similarly, the fee cap of £72,000 will be nearer £150,000 for most people because of the way it is calculated, and higher still, if you want more than a basic standard of living. So how can you best plan ahead and what financial products are available to help? So far, fairly few, although that looks set to change.
US-style life policies, which pay for care, first arrived in the UK more than a decade ago. They were abandoned due to lack of interest.
Brian Fisher, care expert at Friends Life, said: “No one ever thinks they will need care in later life, so not many policies were sold.”
A care adviser, added: “People bury their heads in the sand, until they come face to face with the problem. Most of the people we see are in a state of total shock. They have just been hit between the eyes because mum or dad is going into a home and they suddenly have to find these enormous sums of money from nowhere.”
As the population ages, one in four of us will require support in old age. Pensions and savings will meet some bills, but advisers warn most people will face a funding shortfall of £20,000 or £30,000 a year. The average care home stay lasts two years.
And the state will only help the poorest. Currently, in England, if your combined assets total more than £23,250, you must pay your own way, although the means test threshold rises to £118,000 from April 2016.
Options for funding this gap are fiendishly complex. Choosing the wrong source can bleed families dry, destroying any hopes of passing wealth on to the next generation.
We can guide you through the process
Source : Daily Telegraph