A recent report by the Office of National Statistics shows that the fastest increase in the UK population will be seen in the 85 years and over age group. In mid-2016, there were 1.6 million people aged 85 years and over; by mid 2041 this is projected to double to 3.2 million and by 2066 to treble. The number of people needing community or residential care will rise to 1.2 million by 2040, almost double the 2015 rate.
As a result long term care is becoming an increasing and pressing need for many with 44% of all people receiving care having to fund it entirely themselves. At 2hWealthcare we are experienced in advising clients on the complexities of later life planning. We work with you and your family to create a detailed financial plan so that you can be sure that you are making the right decisions. We look at:
Your current financial position and the funding options available to you
Reducing investment risk to preserve capital
Ways to top up income by using equity release
Cash flow analysis to show the impact of these changes on your capital and income
The suitability of immediate care and deferred care plans
Whether you are receiving the right level of support and whether you should be entitled to NHS continuing care
Reviewing your Wills to ensure they reflect your personal wishes
Immediate Care Plan
Long term care insurance provides the financial support you need if you have to pay for the care of yourself or a member of your family. Whilst local authorities can provide some help, if your assets are valued more than £23,250 then it is likely that you will need to pay for your own care fees. With care costs in the South of England averaging £1,041 per week how do you fund your long term care needs?
An immediate care plan (ICP) is a special type of annuity designed specifically for the elderly which is taken out when long term care is needed. It pays regular income for the rest of that person’s life and can be designed to increase to keep pace with increasing care costs. Providing the income is paid to a registered care home then the income is paid tax free. It gives you peace of mind knowing that you have an income to meet the costs of care for the rest of your life. It also removes the burden from family members or attorneys to keep funding the fees from capital.
The annuity is purchased with a lump sum and how much you receive depends on a number of factors including your age, health, the level of income you need and current annuity rates.
There are risks, once you have taken out the ICP you won’t be able to cancel it and get some of the money back. You also need to consider giving up the lump sum you have invested if you were to die earlier (although you can build in capital protection).
For many the family home is the largest asset and accessing the equity may provide a boost to retirement finances. If you’re aged 55 and over Equity Release enables you to release some of this equity, tax free, without having to make any monthly repayments. You could use the capital received to purchase an immediate care plan or invest the capital and draw an income from it to pay for the care fees.
There are some downsides to consider, the interest rates are typically higher than a standard mortgage and by taking a capital lump sum it could reduce your entitlement to state benefits.
Wills and Lasting Powers of Attorneys
Regardless of your wealth, everyone should consider the merits of having a Will and Lasting Power of Attorney in place to ensure that your wishes are known both during and after your lifetime.
2hWealthcare can introduce you to a trusted and qualified third party who will be able to guide you through the process of making a Will and Lasting Power of Attorney.
Call us now and speak to one of the team on 01494 683100