Care home costs soar 10% in two years

Private care home costs are soaring, up 9.3% in the last two years. The average cost of a room in a care home is now more than double the average pensioner income. That means an annual shortfall of £14,568, according to new research.

Which means UK pensioners need an extra £247 each week to fund care home costs. How sustainable is this? %VIRTUAL-SkimlinksPromo%

Cheaper 'up north'

Since 2012 the average annual cost of a single room in a residential care home has risen by £963 from £27,404 to £28,367. That's £2,414 higher than in 2011, according to data from Prestige Nursing+Care. Meanwhile pensioners' annual income has grown 4.5% (£591) in the last year to £13,799, so the gap between income and care expenses widens.

"The South East became the most expensive region for elderly care homes this year, overtaking the South West with an annual cost of £32,048," says the report. "A room in the South East is £7,405 more per year than in the North East where prices are lowest. The North East also boasts the smallest care cost gap of £10,602, which is almost £7,000 less than the biggest care cost gap of £17,579 in the South West."

Wales saw the biggest yearly hike in the difference between cost and income, rising 29% to £15,516 from £12,064 last year. The East of England was the only region to see a cut in the care cost gap, falling from £17,004 to £15,699.

Cap won't cover

Home care is a more cost-effective option than residential care, and can be right for most but all the most severe cases says Jonathan Bruce from Prestige Nursing+Care. "Even this though can still amount to a considerable bill over the years. We need to ensure the population are care cost-savvy so better financial planning can take place earlier on in life."

Tens of thousands of UK families continue to top up care home charges to look after their elderly. The government's mooted £72,000 cap on lifetime care expenses will not put an end to such top-up fees - basically an 'invisible' subsidy.

Worse, there remains huge confusion across councils about their precise obligations and legal duties to their elderly. A recent report by charity Independent Age estimated some 56,000 British families continue to pay care home top-up expenses.

"Independent Age regularly receives calls from relatives who are concerned that they
are being asked to pay top-up fees because a council has told them it is required for any care,
not because they have requested a higher standard of care."

Not allowed

The charity went on: "Often these relatives are told that the council will only pay a 'standard rate', [but] when they explore potential local care homes, they discover that none has a suitable and available place that is within this standard rate, and that a top-up is therefore required."

When told by Independent Age that councils are not allowed to do this, some continue to pay a top-up rather than complain says the charity. "But others do complain and many find that the council changes its mind and agrees to pay the full cost when challenged."

Prestige Nursing+Care figures

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Care home costs soar 10% in two years
Figures from charity Age UK show that 29% of those over 60 feel uncertain or negative about their current financial situation - with millions facing poverty and hardship. Even though saving for retirement is not much fun, the message is therefore that having to rely on dwindling state benefits in retirement is even less so. To avoid ending up in this situation, adviser Hargreaves Lansdown recommends saving a proportion of your salary equal to half your age at the time of starting a pension. In other words, if you are 30 when you start a pension, you should put in 15% throughout your working life. If you start at 24, saving 12% of your salary a year should produce a similar return.
Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.

The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.

Around 427,000 households in the over-70 age groups are either three months behind with a debt repayment or subject to some form of debt action such as insolvency, according to the Consumer Credit Counselling Service (CCCS).

Its figures also show that those aged 60 or older who came to the CCCS for help last year owed an average of £22,330. Whether you are retired or not, the best way to tackle debt problems is head on.

Free counselling services from the likes of CCCS and Citizens Advice can help with budgeting and dealing with creditors.

Importantly, they can also conduct a welfare benefits check to make sure you are receiving the pension credit, housing and council tax benefits, attendance and disability living allowances you are entitled to.

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The average UK pensioner household faces a £111,400 tax bill in retirement as increasing longevity means pensioners are living on average up to 19 years past the age of 65, according to figures from MetLife. And every year in retirement adds an extra £5,864 in direct and indirect taxes based on current tax rates to the costs for the average pensioner household. You can be forced to go bankrupt if you fail to pay your taxes, so it is vital to factor these costs into your retirement planning.It is also important to check that you are receiving all the benefits and tax breaks you are entitled to if you want to make the most of your retirement cash.

The cost of a room in a care home in many parts of the country is now over £30,000 a year, according to figures from Prestige Nursing and Care. So even if the prime minister announces a cap on care costs - last year the economist Andrew Dilnot called for a new system of funding which would mean that no one would pay more than £35,000 for lifetime care - families will still face huge accommodation costs. Ways to cut this cost include opting for home care rather than a care home. Jonathan Bruce, managing director of Prestige Nursing and Care, said: "For older people who may need care in the shorter term, home care is an option which allows people to maintain their independence for longer while living in their own home and should be included in the cap." However, the only other answer is to save more while you can.
Older Britons are often targeted by unscrupulous criminals - especially if they have a bit of money put away. For example, many over 50s were victims of the so-called courier scam that tricked into keying their pin numbers into their phones and handing their cards to "couriers" who visited their homes. It parted consumers from £1.5 million in under two years. Detective Chief Inspector Paul Barnard, head of the bank sponsored dedicated cheque and plastic crime unit (DCPCU), said: "Many of us feel confident that we can spot fraudsters, but this type of crime can be sophisticated and could happen to anyone." The same is true of boiler room scams that target wealthier Britons with money to invest, offering "once-in-a-lifetime" opportunities to snap up shares at bargain prices. Tactics to watch out for include cold calling, putting you under pressure to pay up or lose the opportunity for good, and claiming to have insider information that they are prepared to share with you.
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