Care Home Fees Immediate Needs Annuity

le_loup

Clifford_Pope wrote: »

Buying an annuity would be like paying up front for all her care costs for the rest of her life. But with an annuity you are guaranteed to lose it all, self-funding there might be some left over.

There is the non-financial benefit. Certainty; that can be worth a fortune!

JacksonM

I have been advised to make sure an annuity is indexed linked and I understand you can pay more cover inflation when the price goes up every year. The local authority will only pay approximately half the fee when the money is gone. The home we've chosen is not one of the luxury type and they do accept local authority rates when all the money is gone so, we at least have peace of mind that mum won't have to move oot when she's in her 90s (it's not purely about the money)

On the comment about freeloading on the tax payer, yes this is a service that has to be funded by someone but imagine a £700 - £1000 per week bill, every week for the rest of your life and if you are a self funder, what happens when your money runs out - your family may have to find the difference between the local authority rate and the fees that the care home home charge which could be hundreds of pounds to find each and every week. Either that or move to a strange, new place that has a rock bottom price and possibly not suitable for your needs or far away from family.
We are not a wealthy family, my parents never owned property either. My parents saved all their lives, genuinely did the fair and honest thing and now we find that if they had been reckless or 'freeloaded' they would not now have to pay a penny for their care.
It's the sheer cost of it all that's so shocking. It wouldn't be quite so bad if the carers got a good wage for such a hard job but they all seem to be on the minimum wage...

xylophone

See http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS10_Paying_for_permanent_residential_care_fcs.pdf?epslanguage=en-GB?dtrk=true


Read information in post 3 above very carefully.

Linton

Clifford_Pope wrote: »

I don't really see the essential difference between running the capital down and then qualifying for funding, or buying the annuity.
Buying an annuity would be like paying up front for all her care costs for the rest of her life. But with an annuity you are guaranteed to lose it all, self-funding there might be some left over.

Surely there is a very great difference. What happens to her if she lives too long? With an annuity she cant. And as far as the beneficiaries are concerned (it's certainly open to question whether their interests should have any bearing on the decision) they could be better off having their downside risks limited if the annuity is less than her total wealth.

kidmugsy

JacksonM wrote: »

My parents saved all their lives, genuinely did the fair and honest thing and now we find that if they had been reckless or 'freeloaded' they would not now have to pay a penny for their care.

Our welfare state was redesigned by the '45 government to bring about that sort of thing i.e. to penalise the frugal and reward the reckless. Presumably it's met with repeated electoral approval because so many people enjoy the thought of piddling their money away and then freeloading on the frugal. How much longer such behaviour can be sustained I don't know. We may be about to find out.

System

Linton wrote: »

Surely there is a very great difference. What happens to her if she lives too long? With an annuity she cant.

The assumption built into the regulations is that someone with savings is obliged to use them up first before turning to state aid. Paying as you go until the money runs would effectively be no different from putting all the savings into an annuity.
When the money's gone, the state will ultimately intervene.

An annuity can't last forever either. It may be index-linked, but not I suspect to care-home costs?

Linton

Clifford_Pope wrote: »

The assumption built into the regulations is that someone with savings is obliged to use them up first before turning to state aid. Paying as you go until the money runs would effectively be no different from putting all the savings into an annuity.
When the money's gone, the state will ultimately intervene.

An annuity can't last forever either. It may be index-linked, but not I suspect to care-home costs?

We really need to know how much extra money is required each year and the annuity rate she would get. Then if the annuity rate is insufficient to make up the difference between her income and the care home costs as you say it doesnt make much difference.

However if the £150K is more than enough to make up the difference it makes sense to me for the immediate needs annuity to be used - it limits the downside risk for her and, if you want to consider their finances as a significant factor, her beneficiaries of her living too long.

LHW99

And if the annuity only requires a part of her funds, the remainder can be invested to provide some growth over the years in case the annuity needs topping up in 5 or 10 years time, or will provide some residual estate if not

Rosie1980

Hi, I am in a similar situation, my 83 year old grandmother has just been made permanent in a care home and so now I am trying to work out the best way forward for her. I wonder if JacksonM went ahead with the annuity and if they have any pearls of wisdom for a newbie to the care game!

xylophone

I wonder if JacksonM went ahead with the annuity and if they have any pearls of wisdom for a newbie to the care game!

You could try a pm to JacksonM.

In the meantime, read the information in links above.

Do you have POA for your grandmother?