Planning For Care Costs?

fred246

Healthcare, education, care homes. All part of the political football. Tories get in and trash the state funded ones so everyone has to go private. Labour get in and try to fund them properly so people will use them. The tory game is to try to make people not realise it. Haven't we just had NHS week? Whenever there is an election the tories bring out spin on how they are looking after public services. It's rubbish but some people are easily persuaded. So the standard of care homes for council funded places is determined by who is in office. After a good while of Tory mismanagement they are called over my dead body groves but a large proportion of the population have no choice but use them. If labour were in power they would be improved. Not Rolls Royce but OK. Between my wife and myself we have well over £1 million so it is unlikely that I will be able to get it to less than £23250. My spending on the time I am well and the funding of my children are much more important to me than funding a care home I probably won't need.

nigelbb

On-the-coast wrote: »

But i do not understand why this should be the position. 90% (a guess on my part) of people will require very little care funding. I'd be very happy to buy insurance (well in advance) that would cover my care in the event that I'm one of the 10%.

This is why as a society this risk should be covered by the Government & paid for by taxation. It's exactly the reason why we have the NHS for healthcare. Everyone is compelled to pay a very small amount whether they will need the service or not. Those they need it are cared for while those that don't will have paid a small amount spread over a lifetime.

lisyloo

nigelbb wrote: »

This is why as a society this risk should be covered by the Government & paid for by taxation. It's exactly the reason why we have the NHS for healthcare. Everyone is compelled to pay a very small amount whether they will need the service or not. Those they need it are cared for while those that don't will have paid a small amount spread over a lifetime.

I’m not sure I agree and I look at my own family as an example.
So should my young nephew who cannot afford a home of his own have to pay more tax so that his elderly grandma can hoard a home she doesn’t need?
Personally I think she should pay rather than expect youngsters who are less rich to pay.
Some people however see this as theft which is why it’s such a political hot potato.

I have seen that there may be efforts to review provision including people being able to plan at a much younger age, however everything has take a back seat to brexit and even if it hadn’t it would take ages to debate this sort of radical change. There is a paper in place to cap care fees that was postponed many years ago so it’s very slow/tricky to get anything through.
The issue is that’s it’s a small number of people who actually care, so politically low on the list.

Fred - I think you are wrong not to care. Imagine a loved one was in overmydeadbodygrove. It would break your heart. So even if you think you won’t care (I disagree) you’re family will and if you life miles away you’re making life hard for them, especially so for anyone that doesn’t drive.
It’s obvious, but if your child (yes not always elderly) was in care would you want them in overmydeadbodygrove (and we haven’t even mentioned abuse yet) or would you like them somewhere that tried to fulfill their wellbeing as much as possible despite their limitations. The answer is obvious. We’re not taking about a wine list and new decor, we’re talking about places that try to engage your abilities however limited rather than you staring at 4 walls 24/7.

fred246

OK I want 10 years in a nice home costing £50K a year and my wife does too. OK we'll sell the house and buy somewhere cheap. Never go on any holidays. Won't give the children or grandchildren a penny. We'll leave the £1M in the bank waiting for our care needs.

Linton

fred246 wrote: »

OK I want 10 years in a nice home costing £50K a year and my wife does too. OK we'll sell the house and buy somewhere cheap. Never go on any holidays. Won't give the children or grandchildren a penny. We'll leave the £1M in the bank waiting for our care needs.

In the almost certain case that you wont both need 10 years in a care home that leaves a nice inheritance for the children/grandchildren.


What you propose is one way of allocating your assets but not one that appeals to me. Its the same argument as to whether one lives a life of luxury now and ignores the future or struggles in penury now in the hope of achieving a very early and very comfortable retirement. The sensible answer is surely a balance.


You are never going to be able to cater for the worst possible outcome whereby you need a care home whilst relatively young and live there for decades. The best you can do is to plan to have sufficient assets in your very old age to cover the more likely situations.

lisyloo

fred246 wrote: »

OK I want 10 years in a nice home costing £50K a year and my wife does too. OK we'll sell the house and buy somewhere cheap. Never go on any holidays. Won't give the children or grandchildren a penny. We'll leave the £1M in the bank waiting for our care needs.

That wasn’t what I was saying (although downsizing can be a part of the plan).
I’m sure you’ve heard of both immediate care needs annuities which wouldn’t cost as much as 1 million and I’m also sure you’ve heard of safe withdrawal rates.

I certainly would propose enjoying yourself now as you may not get to a care home, in fact around 20% of men won’t even reach retirement.

Financial planning is a balance between enjoying yourself now when you are alive and have good health, planning for the likely future e.g. retirement and also planning for foreseeable but less likely events.
This is true at any age as we can get sick, disabled at any age.

I’m sure with the resources you have available that you could find a balance which may be partitioning part of your pension, downsizing, other investments, annuity or a combination. I don’t think it’s beyond your capabilities or your resources to do that.

No it should not be prioritised over everything else, it’s a case of balancing the various priorities as always and in your case it’s doable.

Plenty of other people won’t have a good retirement let alone care home.

What I am saying is that relaying on the LA or sticking your head in the sand are not good strategies for reasons already mentioned by multiple posters.

Keep_pedalling

fred246 wrote: »

OK I want 10 years in a nice home costing £50K a year and my wife does too. OK we'll sell the house and buy somewhere cheap. Never go on any holidays. Won't give the children or grandchildren a penny. We'll leave the £1M in the bank waiting for our care needs.

That is silly, you have not figured in the fact that in a care home you will have fee other expenses and that virtually all your pension income can go towards those costs so you won’t be burning through your savings at a rate that requires anything like £1M set aside for care costs.

We are in a similar situation, and you should easily be able to provide financial assistance to our family, spend plenty on yourselves and make sure you are comfortable in your old age unless the vast majority of your wealth is tied up in your home.

Taking our DB and SP into account I am estimating that I would need to use up £30k PA on care, so in the unlikely event that we need 10 years between us (20 years would be highly unlikely) we need £300k all of which would be subject to IHT under the current rules so the net cost to our estate would be £180k

Malthusian

On-the-coast wrote: »

But i do not understand why this should be the position. 90% (a guess on my part) of people will require very little care funding. I'd be very happy to buy insurance (well in advance) that would cover my care in the event that I'm one of the 10%.

Most of the 90% are not as charitable as you which is why there is no market for care insurance.

If you are in one of the 10% you will either almost certainly have accumulated enough assets by then, or you can't afford care insurance premiums. If you can't afford to accumulate enough assets to pay for your future care, you certainly can't afford to pay for your future care and all the other people in the insurance pool as well.

Self insuring by building up a fund of a great deal of money... that i have a 90% chance of not needing doesn't seem financially sensible.

Why not? If you don't use it, it goes to your kids or your favourite charities or other beneficiaries of your choice, which 99% of the population are happy with.

bostonerimus

You’d think that long term care would be an area where insurance would work well as most people won’t need it and if they do it’s just for a couple of years. So I’m surprised you can’t buy a cheap insurance policy in your 30s to cover the riat

nigelbb

lisyloo wrote: »

I’m not sure I agree and I look at my own family as an example.
So should my young nephew who cannot afford a home of his own have to pay more tax so that his elderly grandma can hoard a home she doesn’t need?
Personally I think she should pay rather than expect youngsters who are less rich to pay.
Some people however see this as theft which is why it’s such a political hot potato.

It's not a question of grandma hoarding or stealing from the young it's everyone pitching in to pay a small amount so that those who do need care are looked after. This kind of insurance only works if it's compulsory so everyone pays & everyone is eligible for help if they need it.

It's just the same as healthcare which by your argument grandma should be selling her house to pay for her heart bypass & cancer treatment.