Care costs too high for pensioners

Elderly lady in nursing homeMore than 80,000 elderly people paying for private care at home or in residential homes run out of money each year and have to turn to local authorities for funding, new research from specialist adviser Key Retirement Solutions reveals.

It estimates that one in four pensioners paying for long-term care have to turn to local authorities.
According to Key, this piles the pressure on local authority budgets as well as the finances of families - and the number of elderly people paying for their own long-term care is forecast to keep growing as the UK begins to see unprecedented increases in retired population.

Dean Mirfin, group director at Key, said: "Elderly people want wherever possible to remain in their own homes when they need care and they and their families want the best standard of care possible.

"That is clearly not happening when people are running out of money and the cost to local authorities at a time when budgets are squeezed is potentially more than £2 billion a year. Careful planning at the outset cannot conjure up money but it can help people know what their options are and what they can achieve."

What is long-term care?
Long-term care is the name for the care and support services that help frail and disabled people remain independent, active and safe.

Services of this kind can be provided in someone's home, in a community centre or in a care home, while the costs are either paid by the individuals themselves or met on a means-tested basis by local authorities.

How much does it cost?
According to a recent report, a quarter of people aged 65 will need to spend very little on care over the rest of their lives.

However, half can expect care costs of up to £20,000, while one in 10 can expect costs of over £100,000 and some could spend hundreds of thousands of pounds.

Who qualifies for government help?
Currently, if social services in England assess someone with less than £14,250 in financial assets as needing care, he or she will qualify for local authority funding.

Meanwhile, those with savings or assets (including their homes if they live alone) of between £14,250 and £23,250 will get some help towards costs.
However, people with assets or savings of more than £23,250 will have to pay for the full cost of their care.

There are proposals to increase this threshold to £100,000 as part of a care funding shake-up, while there are also plans to introduce a £35,000 cap on individual care contributions.

But Key's figures indicate that just one in five of those aged over 65 believe they could afford even this amount.

How can I prepare for care costs in old age?
If you want to take steps to avoid missing out on care you need in later life, options include specialist insurance policies to pay for immediate-needs care and pre-funded care.

If it is too late for that, it is also possible to take out an equity-release scheme that allows you to remain in your home until your death while using the equity to pay your care costs.
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