The average cost for a residential care home is more than £650 a week, rising to over £900 a week if nursing care is required, depending on region. And while many people think they’ll qualify for state support, most do not; over 50% of people going into a care home are paying some or all of the fees.
The most common methods of paying these fees are making regular withdrawals from an investment fund or savings account, and buying an Immediate Needs Annuity (INA).
Investments – potential for growth but also risk
Using investments to fund care fees has the potential for more growth than using cash or ISA funds, albeit with greater risk. These risks include investment growth not keeping up with care fees, and running out of money.
Immediate Needs Annuity – 100% certainty and peace of mind
An Immediate Needs Annuity (INA) is currently the only product that guarantees to cover the cost of care fees at a selected level for life. There’s no investment risk involved. A Deferred Needs Annuity (DNA) provides the same level of certainty but starting at a later date, so could be an option if clients are concerned about an early death.
For more information on the differences between the two main strategies of paying for care click here.
Many people choose a blended approach, using an INA to fund the initial care fees and then using cash or investments later on if care fees increase.
Local authority support and costs of care
Get this factsheet for a summary of state benefits, local authority capital limits and regional care costs here.
Using property to fund care fees
If a client needs to raise funds to pay care fees, they could potentially sell their property and use the proceeds. Or, consider a lifetime mortgage to release the equity in a property in some cases of domiciliary care, for example.
Selling property can be a lengthy process with no certainty of timescales, whereas a lifetime mortgage avoids the need for viewings and waiting for an offer. It can provide a specific amount of money, or as much as possible, and means the property remains in the client’s estate.