As people get older, many worry about how they will find the money to pay for the care they might need in later life. Life savings are often insufficient to cover this, and the thought of selling a much-loved family home can be devastating.
Whilst many older adults can cope on their own into their 80s and even 90s, some may need more help earlier, and this uncertainty around care needs for the future can cause anxiety.
Who needs to pay for care?
The amount that a person will need to contribute to the cost of their care is something that can only be confirmed via a means-tested assessment. The amount of income and savings an individual has, together with whether they are a homeowner and the value of their property, are all considered when making such an assessment.
Those who own their own homes assume that it will be necessary to sell their home when they go into care and that this money is needed to pay for that care. However, other options are available to them. A lifetime mortgage, for example, is just one of the alternatives.
When will I not have to sell my home?
There are also some circumstances when the sale of your property will not be required, including:
- You opt for live-in-care
- You have a spouse or partner who lives in the property
- There is a relative over the age of 60 living in the property
- A relative with a disability lives in the property
- You have a child under 18 who lives in the property
In many cases, the responsibility for paying for care lies with the local authority in the area where you are based when you cannot pay. This responsibility covers various care solutions, including nursing, residential, home care and live-in care.
What types of care are available?
Most people assume that the only care options available to them in later life are residential or nursing care. However, there is a third option, in-home care, and this is becoming increasingly popular.
Nursing home
For those who have medical issues that require a little more care, nursing homes have traditionally been the best option. Similar to a residential home, this provides them with access to onsite specialist nursing care to help them with any medical issues that they might have.
Residential care home
Residential care, on the other hand, is more appropriate for those who simply need general help on a daily basis. If later on they need medical care as well, the move to a nursing home is a relatively simple one.
Live-in care
Live-in care means just that: staying in your own property with a carer living in your home with you 24/7. This is someone who can assist with day-to-day tasks or with the appropriate experience to also help with any medical conditions.
Financing later life care
For both residential and nursing homes, there is the option of renting out your property to generate the income to cover the care costs. However, you will need to own your property outright, and the rent will need to be enough to cover the fees in a home, which is often not the case.
A deferred payment scheme via the local authority is another option if your savings are under the appropriate threshold. See below for some more information.
A lifetime mortgage is another option for those who want to consider live-in care as this allows for the use of some of the value of the property to pay for that care. Depending on the amount the property is valued at, this can potentially leave an inheritance to loved ones, and there is the possibility that the value of the property will increase.
Whichever option you think you may want, it is important to consider professional financial advice early on to help plan for potential care needs in the future.
What assistance is available from the local authority?
For those people who may require care in their later years, there can be assistance available via the local authority. This care is assessed on a means basis and will vary from one person to another. The amount that you will need to pay is dependent on any income and levels of savings that you have, together with the value of your property and if you own it.
If you are not able to pay for your care, the local authority will be responsible for covering a range of care options.
A local authority deferred payment scheme means that the local authority will pay in full for any care that you receive, and once your property is sold, they will receive money from the proceeds to pay them back. This is available if your savings are under the threshold and you have equity in your property. It is a similar scheme to equity release. Because there are many different types of equity release options and lifetime mortgages available, it is a good idea to shop around for the best option for your individual circumstances. You should also see which care options are available to you if you choose this route.
Planning for the future
It is never too early to start thinking about finances for later life, and this includes thinking about the type of strategies that you might use in order to safeguard your home whilst still preparing for the potential costs of care.
This planning should consider all of the options that might be available to you and should include checking out the costs of the various types of care that are available.
It is important to look at ways in which you can also protect your assets in the future and the legal tools that are at your disposal to do this, for example trusts.
There are a number of care options that are available in later years, and not all of them involve the sale of your home. Do some research to find the right care solution for your expected needs. With the right, careful, financial planning there are alternatives available that are well worth exploring.