How many years of care can you afford

How many years of care can you afford by self-funding?

There’s a good chance that you are going need to move into a care home in later life. At the moment, if you live in England or Northern Ireland you have to self-fund your care home fees if your assets (which may include your property) or savings add up to more than £23,250.

In The Care Act 2014, the government pledged to cap the cost of paying for long-term care. According to new legislation, by 2020, a new contribution cap of £72,000 will be set. Which is comforting to know for self-funders!

The cap is not as straightforward as it sounds

As is often the case with government legislation though, the cap isn’t as black and white as it may seem. In reality, it will take much longer to reach the contribution cap then you may initially expect. This is because the £72,000 cap only applies to the cost of providing care. It does not include the cost of your board and lodging.

On top of that, the cap relates to how much care you could buy at the rate your local authority is prepared to pay for your care. This could be less than the actual price you have to pay.

With this in mind, if you go to live in a care home that costs £720 a week, you won’t be paying for only 100 weeks as you would expect. It will take much longer to reach the £72,000 target.

Ultimately, someone who is paying the average cost of a care home in England would need to pay for 5 years of care before they reach the cap. When you consider that the average care home stay is around two and a half years, it’s unlikely that you will actually benefit from this promised cap.

So how will you pay for your care?

The best option is to be prepared. See if you can save up enough money during your lifetime to cover as many of the costs as possible.

If you do not have savings in place, then often your home may be the way you will pay. Unless your partner or spouse is still living there, you will be expected to sell up to fund your care.

There are options which allow you to keep your home and still afford your care. These include:

  • releasing equity from your home – interest is paid on the money if you choose this option
  • renting your home out to pay for your care
  • deferred payment scheme – the council pays for your care and you repay it later once you sell your home or once you die (the money would be taken from your estate).

Always seek independent financial advice when you are considering any of these options. The best route, as with many things, depends on your individual circumstances.

If you want to discuss planning for your future care, get in touch with us. We will be happy to talk you through your options.

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