Long-term care options

Couple with financial adviserA crisis has developed in the funding of long-term care for the elderly. As the proportion of elderly Britons continues to rise, demand for care is exceeding supply, and payment for long-term care has become an increasingly pressing problem.

The government is making changes to the way that long-term care is financed, and expects to have implemented all these changes by April 2016. Some of these changes have been instigated as a result of recommendations from the 2011 Dilnot Commission on Funding of Care & Support.

The amount of financial support that you can expect from the state will differ depending whether you live in England, Wales, Scotland, or Northern Ireland. The Money Advice Service (MA) recommends that you double-check that you are claiming all the state and other benefits for which you might qualify.

You have various options to consider when planning your future long-term care, but it is important to speak to a financial adviser who can help you explore all the available alternatives and help you to find the strategy that is best for you. There are different types of long-term care plans available; for example, “immediate needs annuities” can help to bridge the gap between your income and your care costs.

You could also consider using your pension pot to purchase an enhanced annuity, which will pay a higher level of regular income if you have a long-term medical condition, or a lifestyle that is considered likely to reduce your life expectancy.

Equity release is another possible option – this frees up some of the capital in your home via a loan secured against your property. However, equity release schemes should be approached with caution; it is vital to take expert and impartial advice, as they don’t necessarily offer good value for money.

You could also consider downsizing, and selling your home to buy a smaller place, thereby freeing capital to help finance your long-term care. However, it’s worth remembering that selling and/or buying a property will incur certain costs – for example, legal expenses, moving costs, stamp duty – that will have to be taken into account.

Above all, speak to a financial adviser, and start planning as early as possible. According to the Association of British Insurers (ABI), one in three people will require care, so there is a good chance that you will be affected.

Our adviser, Emma Greer, is fully qualified in the specialised area of long-term care. She can be contacted by e-mail: emma@freedom-financial.co.uk, office telephone: 028 9022 9798 or mobile: 07885 407604.

The value of your investment can go down as well as up and you may not get back as much as you originally invested.

Equity release is a lifetime mortgage or home reversion plan. To understand the features and risks, always ask for a personalised illustration. Please note that Freedom Financial Planning do not provide advice on equity release.

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