Why it’s important to factor the cost of later life care into your financial plan

When you’re planning for retirement, it’s only right that you think about all the things you want to do once you’re no longer working. Foreign travel, new hobbies, and more time with grandchildren might all have been budgeted for in your plan.

It’s also important to think about the costs you might incur in later life when you reach the so-called ‘active’ stage of your retirement and begin to think about inheritance and estate planning.

The cost of later life care is an important thing to factor into your plan and one that you can’t afford to neglect.

At Logic, our Society of Later Life Advisers (SOLLA) accredited advisers are on hand to help you.

Why budget for later life care?

There are many reasons why it’s important to budget for the cost of later life care. Here are a few of them:

  • We’re all living longer

According to a recent Guardian article, we’re all living longer. During 2019 the average UK life expectancy rose to over 83 and a half years for women and nearly 80 for men.

The Office for National Statistics confirms that social care needs to increase with age, with ‘one in five men and women aged between 75 and 84 having at least some problems washing or dressing. This rises to 34% of men and 42% of women at ages 85 and over.’

An ageing population means we’re all more likely to need care at some stage in our life.

  • It will give you peace of mind

The government confirmed in 2017 that the average cost for someone in self-funded care in 2016 was £846 per week (nearly £44,000 per year).

Acknowledging the potential need for future care and knowing where the necessary money will come from will give you and your family peace of mind. Confidence in your future plan will help you enjoy the present.

  • It will start you thinking about the types of care available

With many different care options and the one you choose very much dependent on the type of needs you have in later life, you certainly don’t need to make any decisions at this stage. But an awareness of the different care options available and their relative costs will help future budgeting.

You might be determined to stay in your own home for as long as possible. That might mean adapting it to meet your changing needs and paying for home care visits.

If living in your home is no longer the best option, you might need to consider a move to assisted living or sheltered accommodation. This can give a level of independence with the reassurance that care is on hand should you need it.

If your needs become greater it might be that a move to a care home is necessary, so be sure your retirement plan acknowledges this possibility.

How will you fund your care?

Factoring the cost of later life care into your retirement plan is important, so if you need any help with any aspect of the process speak to us.

There are many ways you might fund your later life care, depending on the type of care you need and the amount you have available to self-fund.

Here are a few options:

  • Using available assets

You might have assets you can allocate to self-funding your later life care.

Whether that’s savings, dividends, or investments, ensure you have enough to cover the cost of whatever later life throws at you and have a backup plan if your assets prove to be insufficient.

  • Immediate care plan

An immediate care plan, also known as an immediate needs annuity or a care fee payment plan can give you a guaranteed, regular income.

You might consider a care fee payment plan if you have the money available to invest and the need for care is imminent.

The invested amount is used to buy a regular income for life. Once the annuity is in payment it cannot be changed or cancelled, nor can any ‘unused’ money be claimed back. A care fee plan might not be the best option if you only need the care temporarily or if you want any of your invested money back in the future.

Remember to shop around. Check the UK Care Guide or speak to your Logic financial planner.

  • Equity release to fund home care

You might be able to unlock the equity tied-up in your home using a lifetime mortgage or a home reversion plan.

With a lifetime mortgage, you take a loan, receive a lump sum or regular payments, but you don’t make any repayments. Accumulated interest is added to your mortgage debt, with the full amount deducted from your estate when you die or enter long-term care.

A home reversion plan involves selling all or part of your property at low market value. You no longer have sole ownership of your home but you can continue to live – and receive care – there.

The scheme provider will take back their share of your property when it is sold, with the remaining percentage going to your estate.

How our SOLLA accredited advisers can help

The Society of Later Life Advisers (SOLLA) has seven key aims. Amongst them are raising awareness of financial issues facing those in later life, promoting professionalism and providing training to help advisers keep up to date with later-life issues.

At Logic, we also understand how important it is to provide an excellent standard of advice to our clients. That’s why Lindsey and Harj are both SOLLA accredited.

They are specially trained to understand and manage later life financial issues and can provide quality financial advice matched to your individual needs, giving you confidence and peace of mind.

Seek our advice when planning for the cost of later-life care and our expert advisers can help you find the best solution. We can help to ensure that all potential outcomes are understood and factored in, providing you and your loved ones with protection should the unexpected happen.

Get in touch

If you’d like to discuss any aspect of planning for later life care, just get in touch. Contact us at info@logicfinancialservices.co.uk.