Will you Cruise into long term care

Or check into ‘The Best Exotic Marigold Hotel’ in India?

By Dan Hiles, Chartered Financial Planner, Brunel Capital Partners

Once you have reached the point you can no longer enjoy an active lifestyle how will you enjoy peace of mind and comfort in later life?

I was sent an interesting article recently which suggested that a world cruise could be a viable alternative to entering a care home.

Whilst the point was slightly tongue in cheek it did raise a pertinent point about the affordability of long term care. This, in turn, made me wonder how much people consider long term care in their wider plans.

The average nursing home in the South West cost £851 per week in 2014/15 which is over £44,000 a year according to a LaingBuisson survey of care homes. Just for residential care the cost is still over £30,000 a year. A three plus month cruise could cost £675 a week which starts to look quite the bargain in comparison. It should also be pointed out that this is an average.

How do you feel about living in an average care home for your final years?

The more comfort you want to live in the more it will cost and over £1,750 a week is increasingly a reality.

The average person, self-funding their care, will spend nearly four years in a care home. That again puts the ‘average’ cost at £176,000. Not an insubstantial sum to still have in your bucket in later life. BUPA even has a resident who has been in one of their homes for 24 years. I daren’t get the calculator out for the cost of that!

Isn’t there supposed to be a cap on care costs of £72,000?

Unfortunately, as is often the case, the headlines mask the reality. As well as delaying implementation to 2020, the amount the government count towards this cap is just £251 a week regardless of what you actually pay. It would therefore take over five years (287 weeks) to reach the cap. By that point the average nursing home resident in the South West would actually have spent £244,000. And afterwards you are still liable to ‘hotel costs’ which could be in excess of £20,000 a year.

How likely is it you will actually need care?

Government studies suggest 70% of people reaching 65 will require some level of care in their lifetimes. Clearly this will come at different levels and most will not need to leave their own homes. Industry projections suggest that those requiring residential care will be closer to 1 in 3 women and 1 in 4 men albeit an ageing population is only likely to send the numbers in one direction.

Is everything lost?

Should you stop spending and enjoying your life and start saving every penny again? Fortunately, there are a range of ways to mitigate the potential cost of long term care but it does involve careful consideration and planning.

Whilst this may not be an immediate concern for you, we are finding that an increasing number of clients have parents reaching the position where long term care is an issue.

If this sounds familiar or you feel may become an issue in the future, please give us a call to talk things over.

Dan Hiles, 0117 214 0870, dan@brunelcp.com