As time goes on, financial planning for the future becomes more important. For those of us looking to ensure we’re comfortable into our later years, calculating the cost of care homes is essential. It may seem far off, but it’s never too soon to start building up a nest egg for retirement.
Given that a considerable chunk of that nest egg could be spent on care home fees, why not take the opportunity to break down the costs involved. Here are some common questions about the cost of care homes.
1. Will I have to pay for my care home?
If your combined total capital, including property, amounts to more than £23,250, the answer is yes.
Your local authority will assess you to find out exactly how much you will have to pay. Having to pay for your own care doesn’t necessarily mean you’ll have to sell your home, however. You might want to think about renting your property out, for example, and using the rental income to cover your care fees.
Remember that other assets you hold can be kept until the time comes to release the equity. This means pension investments like stocks and bonds can be left to build up their value over the long term.
2. What if my total capital is less than £23,250?
In this case there are a couple of thresholds to keep in mind. If your total capital is anywhere between £23,250 and £14,250, this will be taken into consideration. The reason for this is that your local authority will assume that an amount between these two figures can provide you with an income.
If you own a combined total of less than £14,250 in capital, this amount won’t be included in your assessment.
3. Will my partner’s assets be included in my means testing?
If you hold assets in both your names jointly, including any cash savings, they will be included. But note if one of you goes into care and the other remains living in your home then your property will be excluded from your means testing. For many, this will be welcome news.
4. What if I give away all my assets to my children before going into care?
This is a common notion, but passing on your assets to your children needs careful planning.
If you suddenly opt to give away all your assets to your family after retirement, it can be seen as a ‘deprivation of assets’. This means the local authority might interpret it as a deliberate way of avoiding paying for care, and in this case could assess you as if you still owned all of your capital.
This situation is obviously best avoided, so it’s important to plan for your future sooner rather than later, by seeking expert financial advice well ahead of retirement.
5. What if I go into care and then run out of money?
Again, with some careful advance planning you can avoid situations such as this. The important thing to do would be to apply to your local authority for financial assistance several months ahead of running low on funds. Ideally, you should do this before your capital dips below £23,250. Once you reach this figure you’ll be eligible for funding, so be sure to apply in good time and avoid eating into your remaining savings.
It’s worth noting that most local authorities will have a maximum amount they will pay to cover the cost of your care. You should take this into account when choosing your care home.
6. Will I be eligible for extra funding if I have a medical condition?
Depending on the condition, you can certainly apply for extra funding and assistance in your care plan. For example, if you will require a nurse or specialist care, NHS funding will be included in your allowance.
Retirement and end of life care will come to us all. The most important thing to remember is that a little planning makes a lot of difference.
These are only a handful of some of the most frequently asked questions surrounding care. For a clearer understanding of the cost of care homes, download our free guide using the button below. Take your first step to planning for long-term care.