Planning For Care Costs?

lisyloo

One practical solution is to buy an immediate needs annuity at the time.
My MIL is 91 (and obviously female) and I was told ball park 3 years fees for the costs so around £100k. That would depend on age, gender and health, but we never got that far.
So you pay 3 years fees (for female 91) and the annuity pays out until you die a bit like a pension annuity.
There are issues around increases but it’s one way to avoid the risk of a long stay which is exceptional but does happen.

Planning to be at the mercy of the LA as Fred suggests could see you in an overmydeadbody care home or split up from your spouse.
Our LA wanted to split up my FIL and MIl after 60 years of marriage even though there was a place available in the same home, in order to save money.
Don’t expect to live with spouse or be near family if you rely on the LA and expect to sit in urine/faeces with your dressing hanging off. You may be cold but the staff are on their coffee break chatting and no one can be bothered to bring you a blanket.
This is based on real world experience of homes we visited.
Good luck with that Fred.

Oh and you’ll need to make sure you don’t have a property either.
Not sure how you’ll manage to do that if you are losing mental capacity.
Most physical issues can be catered for at home (with hoists and incontinenc wear etc). It’s not being able to make safe decisions that puts people in care homes, so if you think you can manage your money and sell a house when you can’t manage when you need a drink or how to cook safely then I think it’s a flawed plan.

fred246

I could always find a new wife in the care home if I wasn't allowed to take my current one. Actually not a bad idea.

lisyloo

Most of them are very easy to get along with as most of them can’t see or hear you very well but there are lots of single ladies.

On-the-coast

Thanks - i appreciate the comments at both ends of the "personal risk" spectrum.
googling "immediate needs annuity" led me to this article:
https://ukcareguide.co.uk/immediate-care-annuity/
So.... i think the basic idea is that you wait until you need to go into a care home... and then you make a gamble:
A) you buy an annuity... which will be cheaper because you're not expected to survive too long when you do actually need that level of care.
you pay as you go... and hope your money doesn't run out before you do.
~A sounds more attractive.
But i wonder in practice how many people have the capacity to think through this at the point at which they need long term care?
Note: my elderly father recently broke a lot of bones falling off a ladder which has led me to this course of research! Hopefully he'll mend fully, but it's good to be prepared.

fred246

How times change. Years ago after a big fall you would call all the king's horses and all the king's men. Now you check out immediate care annuities.

lisyloo

A) an annuity will only be cheaper if you outlive the insurers expectations (which are based on real data of how long people live plus profit). If you die earlier than expected then it will be more expensive I.e, the lump sum will be more than the fees you would have paid.
In general it’s going to be more expensive because insurers do not work for free, so on average you’ll be out of pocket.
The main point is to cover the risk of surviving a long time and of course peace of mind that you’ll never run out of money.
That comes at a premium, just as it does with pension annuities.

I was looking at this on my MILs behalf as deputy as she’s lost mental capacity. I had to go through the court of protection because she would not agree to a lasting power of attorney whilst she had capacity. Going through the courts is slow expensive and arduous.

The ideal situation is for people put lasting power of attorney in place whilst they have mental capacity. Even better is to discuss their wishes as well.

You are absolutely right, by the time people can’t remember their medication or that they need to eat and drink or that they can’t put foil in the microwave, it’s too late to do financial planning.

In my view annuities help a limited section of society.
Those who can’t afford a six figure sum will be excluded
Those who are very rich don’t need it.
So it only helps those who are quite comfortably off e.g. have an expensive home and could downsize to release a six figure sum, but no so rich they don’t have to worry about running out of money.

My MIL was at the very bottom of the range.
She could afford the annuity initially having sold a small property but could not necessarily afford top up annuities if fees increased above initial expectations. We did not buy the annuity and she is currently in decline. Because she would not be able to afford top-ups we didn’t feel the annuity offered up the guarantee we thought it would.

Whilst her nursing home is above LA rate, she was LA funded before, so we think she could be again, within the same nursing home.

hugheskevi

a house figures in my worst case planning... but that's not an option for all - and yes i want to enable my children & grandchildren to purchase property in the future through what i leave behind if possible (without compromising myself or my partners long-term care)

Property will feature in our plans too.

We plan to retire to a fairly large rural property for the bulk of our retirement. That will have big grounds, etc. As such it will become inappropriate as we age.

I expect that at some point as we approach age 80 we will relocate to a more practical location and a smaller property. This will release funds to be used for residential care / in-house care if required. That should be more than sufficient for either of us needing care.

We will manage our pensions such that we each will have the same income regardless of which of us die first.

If we both need care, or one has died and the other needs care, and there are no lump sum funds remaining, then the (smaller) house can be sold and that should be plenty of funding.

Keep_pedalling

fred246 wrote: »

Enjoy life while you have good health and make sure you have less than £23250 in the bank when you need a care home.

If only we all had a crystal ball, that told us if and when that would happen. If I did I certainly would not deliberately leave my fate to the LA though. If I need care I want it when it’s needed not when a financial panel decides that I am decrepit enough to get it and I want the choice of care at home (and I don’t mean three 15 min visits a day), and if my needs are too high for that I want a care home that provides a high quality of care, with good accommodation and facilities.

drumtochty

Linton wrote: »

A sad and difficult story. I would have thought with this level of need a care assessment would lead to the council paying a viable % of the costs for a care home. Perhaps this isnt what she or her sons want. What does one do to avoid this sort of situation? Have a separate fund of perhaps 9X£30K? But why 9 years? It is not impossible that this old lady could live another 9 years.



The point is that at some stage you have to pool your risks and make the assumption that there will not be a perfect storm when everything goes wrong.

The lady wants to stay in her home and the son's fund this and they accept it is what she wants. One son has no issue financing his share, another can just about afford his share and the last one has major issues funding his share as he is now retired and did not earn a lot when employed.


The least well of son will probably not break even in the next few years if the mother dies and the house is sold and this will not assist in funding his own and his wife's later years retirement. Not a good situation at all.

drumtochty

Dymphna60 wrote: »

@drumtochty - would that be about 59,0000£ a year then ?
Save half of annual earnings for 40- 45 years ? Or am I counting wrong ?

Sorry, I do not have the full figures but and this is very rough, I think the Local Authority fund say £4,000 to £6,000 of the overal cost.