When contacted for advice on long term care funding too often I will find a family in crisis mode. A loved one in poor health can no longer manage living at home and needs to move into care. For most of us dealing with this situation will be an emotional and stressful time.
The family will then face a complex set of rules on funding and be asked to make a number of important decisions. The care funding rules are new territory to most people. Taking responsibility for mum or dad’s wellbeing and the financing of their care can be daunting. With emotions running high many ‘what if’s’ are asked.
When someone is at the point of needing residential care our advice is usually focused on effective ways to pay for it from their available assets, usually cash and property.
In contrast, when approached for help in the years before care is needed, the possibility of paying the costs of care can be built into an overall financial plan.
Simply having a plan can remove much of the uncertainty and the resulting negative emotions from the situation if it arises in later life.
Many of us have heard about the 5 ‘P’s at some point – ‘Proper Preparation Prevents Poor Performance’.
In recent years there’s been much talk in the media about pensions and retirement planning, not all of which has been positive, for example the deferral of state pension age for women. Nonetheless, such legislation, along with the triple lock and pension freedoms has raised awareness of the topic among the wider public.
So even if the plans were ineffective, most did have some kind of retirement plan in place. Yet when it comes to possible future care needs, it seems the overwhelming majority of people have not made any plans at all for how they will pay for adult social care in older age.
Given that the likelihood of needing some form of care is around one in four, it is worth asking why such lack of planning for care needs persists.
Back in October 2018 a national public poll* by the Local Government Association shed some light on this when it revealed that nearly half of English adults (48 per cent) surveyed said that they had little to no understanding of what the term ‘social care’ meant.
Alarmingly, 5% of people had never heard of the term ‘social care’ at all. Of those that had, 44% thought that social care was provided by the NHS and 28% thought that it was free.
As a specialist care adviser** this is something I come across frequently. Moreover, the majority of those in need of care and who must pay for it have never heard of a care plan or Immediate Needs Annuity, despite an almost universally perceived need for certainty in respect of meeting future care costs.
The Society Of Later Life Advisers (SOLLA) helps people and their families in finding trusted accredited financial advisers who understand financial needs in later life. A well-qualified adviser who is also somebody who understands the plans you need to make for your retirement years.
“By failing to prepare, you are preparing to fail” – Benjamin Franklin
Barra Gorman FPFS
Chartered Financial Planner