Planning For Later Life Experts Say Saving Attitudes ‘Drastically Insufficient And Full Of Misinformation’
Later life experts at leading national law firm Irwin Mitchell Private Wealth are warning attitudes towards saving for care home fees are ‘drastically insufficient’ and that planning for later life fees is as important as paying into a pension.
The call comes after new figures from financial planners Just Group found the average stay in a care home was 130 weeks, but that the average amount of savings contributed to the newly proposed Care ISA wouldn’t get close to covering this cost.
In August the government announced the Care ISA plans, which is intended for tax-free savings specifically for care home fees. The plans have been met with scepticism from the later life planning sector, with Irwin Mitchell Private Wealth specialists arguing it fails to alleviate worries care home fees will deplete net estates and lacks detailed plans.
The Just Group study also revealed that over half of 45 to 54 year-olds haven’t considered how they would pay for care, highlighting a worrying attitude towards planning for the future.
Care home fees continue to rise – Age UK reports costs currently average £600 a week for a care home place and over £800 a week for a place in a nursing home. Research from LaingBuisson last year found care home fees had almost doubled from £445 in 1998 to £845 in 2017.
Expert Opinion“Care home fees are always something that gets pushed to the back of one’s mind. People think because it’s so far in the future, dedicating funds to it can wait while other big life spends happen like paying off a mortgage and bringing up children. This is leaving the public woefully unprepared for paying for a care home when they need it.
“The reality is that planning for care home fees should be up there with paying into a pension. The most basic personal finance advice advises paying into a pension as early as you can – so much so that the government introduced auto-enrolment schemes which will soon be increasing their minimum payment percentages. So why aren’t care home fees accounted for this early on as well?” Kelly Greig - Partner
There are some protections that go towards providing for care if you do not have provision. A care annuity can be bought when someone moves into a care home – although this is a large upfront cost, it gives peace of mind that the fees will be covered for the duration and gives an idea of what assets will be left to pass on.
The government also provides means-tested social care. If you have assets of more than £23,250 for care in England and Northern Ireland, £27,250 in Scotland, or £40,000 for Wales then generally you will be responsible for your own care home fees until you have depleted your assets to these levels.
A green paper from the government is expected this autumn which will detail new proposals for social care – but this will all be in vain if attitudes towards later life planning doesn’t change, argue later life experts.
“There have been many promises from the government over the years with regards to care home fees,” Kelly continued. “Plans for a care cap of £72,000, a care tax and now a Care ISA have all been touted. The lack of clarity on any of these plans while care home fees continue to skyrocket suggests that planning for care should be at the forefront of everyone’s mind much earlier than they want to think about it.
“If we can change the attitudes towards saving and planning – which are currently drastically insufficient and full of misinformation – then this would not only help the individual in question but lessen the strain on social care funding.
“It’s absolutely not a fun thing to think about, particularly when you’re busy with your career, raising a family or maintaining a property – but saving now will mean there’s a much less overhead cost when going into a care home and you’ll have more assets to pass on to your loved ones. We look forward to seeing what proposals the green paper will bring.”