Archived article: This article was correct at the time of publishing. Tax, investments and pension rules can change over time so the information below may not be current.

Are you planning for long-term care costs?

Long-term care fees have hit the headlines recently with the announcement of the Conservative party’s proposed ‘dementia tax’. Whether or not the plan comes into fruition, paying for long-term care remains a big financial issue for many people.

And yet, according to new research from our wider Tilney Group, less than one in three over-45s are factoring the cost of long-term care into their retirement plans. But with rising life expectancies and public health services already stretched, many people will need to pay for their own care when the time comes. In this article we look at what can be done to ensure you will receive the care you need and deserve in future.

Old person walking aid

70% of people don’t think about care costs

In our recent Cost of Tomorrow report we took an in-depth look at people’s saving, spending and attitudes towards money over their lifetimes. We found that more than 70% of people aged 45 and over aren’t factoring the cost of long-term care into their financial plans. Our research also showed that 40% of over-45s don’t think they will ever need long-term care – even though one in six people aged over 85 are currently living in care homes, according to the latest figures.

The cost of care is rising

With prices increasing, it is becoming more important to plan ahead and ensure you don’t run into a shortfall later on. The average cost of annual residential care home fees is now £36,000*, and nursing homes now charge an average of £1,000 a week**. Care at home costs vary depending on how much care is needed, but they can be significant – especially if 24-hour live-in care is required.

The average cost of annual residential care home fees is now £36,000*, and nursing homes now charge an average of £1,000 a week**.

How will you pay for your care?

When it comes to paying for care, a lot of people are unclear how much support they are entitled to – if any. Our research found that one in five people believe their care will be funded by the State, but this isn’t often the case. Generally you will need to fund your own care if you have more than £23,250 of assets – although there are exceptions and the rules are complex.

If you need to fund your own care there are plenty of options. You could use income taken from pensions or rental properties, draw on capital assets such as investments or buy a long-term care annuity. These annuities pay out a regular income in exchange for a one-off lump sum and can only be bought through an adviser.

Find out more about planning and paying for care

Tilney's guide to paying for care tells you more about how much care fees cost, the different ways to pay for them and how we can help you plan for the future. If you would like to speak to a local Tilney financial planner about paying for care, please book a no-obligation consultation by calling 020 7189 2400, emailing or submitting this short online form on the Tilney website.

*Knight Frank, 2016 Care Homes Trading Performance Review

**LaingBuisson Care of Older People report, May 2017.