Saving the elderly from care-funding distress

It’s very sobering that a place in a care home for the elderly can cost £40,000 to £50,000 a year – few of us could meet such charges from our normal monthly retirement income.

An elderly person may need care for a variety of reasons. Their bodies might just be wearing out, they could be developing dementia, or they could have had a serious accident such as a car crash or a fall.

Whichever way, they suddenly find they are unable to continue living independently. Their GP will normally recommend contact with the local authority Social Care Team but if the elderly person has individual assets in excess of £23,250 they will not be eligible for any financial assistance.

They’re classed as “self-funders” and will have to pay all the costs of providing their own care either at home or in a residential care or nursing home.

Many feel aggrieved that they have paid taxes all their lives but are getting no State help now – because governments have spent too much on wars and foreign aid!

Families are naturally worried and often distressed at such times. Yet local authorities (in my view, to their shame) do not tell families that Independent Financial Advisers could give them very valuable advice.

The family’s priority is to ensure their elderly relative receives the best care available without evaporating the total wealth they have spent their whole lives building, while the elderly usually tell me that leaving an inheritance to their children and grandchildren is as important to them as paying for their care.

So what are their options?

  1. They can put their money into deposit accounts and pay for the cost of care every month.
  2. They can invest on the stock market to obtain better rates of return, but this is obviously a gamble and rarely recommended.
  3. They can purchase a long-term care annuity, which is a one-off payment that will pay a tax-free income for life and still leave a reasonable inheritance.
  4. They can consider an Equity Release Mortgage, which can be used very effectively to pay for care in their own home (domiciliary care), so keeping spouses or partners together.

I just wish Social Care Teams could let people know these options exist by pointing them our way – they could preserve a large part of their capital and savings, and never become a potential drain on precious local authority funds!


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