How prepared are you for later life?

Generally speaking, people are living longer. It is a welcome thought to know that we are likely to out-live previous generations and get to spend more time with our families and loved-ones. However, old age does tend to bring along certain ailments that can compromise our standard of living and one of the main challenges as we grow older is the quality of life we lead. 

Later-life planning (also known as long-term care) refers to a range of services and support for individuals who have chronic illnesses or disabilities and need assistance with daily activities over an extended period. These services can include residential nursing and care homes, assisted living facilities, in-home care, and more. This is aimed at helping people maintain their quality of life and independence. Planning for later-life is therefore an essential element in ensuring financial and healthcare needs are met and are sustainable as individuals age and face health challenges. 

Later-life planning involves making decisions and preparations for your senior years and so here are some key aspects to consider:

• Assess Your Needs: Evaluate your current health, family history, and potential long-term care needs. Consider whether you might prefer care at home or in a facility.
• Financial Planning: Research the costs of long-term care services and explore funding options. This may involve personal savings, long-term care insurance or other financial instruments.
• Legal Documents: Create essential legal documents such as a will and power of attorney (health and welfare, property and financial affairs) to ensure your wishes are known and followed.
• Long-Term Care Insurance: Investigate long-term care insurance policies and consider purchasing one that suits your needs if it is financially viable.
• Explore Government/Local Authority support: this can potentially help cover long-term care costs if you meet specific eligibility criteria.
• Lifestyle Choices: Make healthy lifestyle choices that could reduce the risk of needing future long-term care.
• Family and loved-ones: Keep them involved or at least aware of your plans
• Review and Update: Regularly review and update your long-term care plans as your circumstances change.

How much does care cost?

The exact cost of your care will depend on various criteria, such as the type of care you receive, how many hours per week you need it and your care provider. 

Ways for you to pay for such care could include:

• Pension income
• Savings and investments
• An immediate care-plan
• Drawing on capital
• Your home

Your home

Your ability to pay for care could be calculated through a means test. Your home will not be included if you receive care and support at home or if you go into a nursing or care home on a short-term or temporary basis. If you move into a nursing or care home permanently, your home will not be included if, for example, your partner still lives there or, in certain circumstances, a relative. 

Currently, if your capital wealth is above £23,250 you are likely to have to pay your fees in full. If your capital is under £23,250 you may get some help from the local council, but you may still need to also contribute towards the fees. If the local council is arranging your nursing or care, they will complete a means test to decide how much you should pay towards it, and they may take into account the value of your home. The means test will look at your capital and income, such as your savings, property, investments, pensions and any benefits you are eligible for (even if you are not claiming them). Certain types of income and capital are ignored in the means test. For example, benefits, such as the mobility component of Disability Living Allowance or Personal Independence 

Equity Release

Releasing capital from a property is potentially an option where the family home is owned by more than one individual. Specialist advice should always be sought in this scenario.

Gifting

Some people consider giving their assets to someone else, such as a child or relative, so that it won’t be counted in the means test. However, this may count as a deliberate deprivation of assets, meaning you would still have to pay the same level of care fees as if you still owned your home. It is important to find out more about how deprivation of assets would apply to you if this is something you are thinking about.

Care is usually expensive, and in the case of full-time care it is often very expensive. Whether or not you feel that you may struggle to see how you could meet this challenge, you can speak to an independent financial adviser who specialises in this area. 

Also remember that funding arrangements may take time to put in place, so the sooner you contact a specialist, the better. Good financial planning means helping with a strategy of meeting the costs of funding for later-life planning but also it may be possible to plan for care without fully depleting assets and effectively also ring-fencing an inheritance for future generations. By drawing on cash savings, investing money for income or purchasing an immediate-care annuity, it is potentially possible to tailor a care funding strategy to suit your individual needs. The marketplace is hugely complex and therefore knowledge and experience can prove vital in building the right strategy for you. Later-life planning can effectively mitigate the costs involved and can help avoid expensive mistakes to prevent wasting money or indeed running out of money too soon.