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Future thinking – Care planning: Part 1

Many of us think about the future. What will the weather be like later? What sort of boyfriend will my daughter bring home? Will I look even more like my dad in 10 years than I do now? From a financial perspective this will often include taking out life assurance to protect loved ones in the event of death; pensions to provide a source of income post-retirement; Wills to ensure that our estate passes to those we wish to benefit. But what about planning for future care needs and costs?

In their 2023 Care Report, JUST reveal that 94% of over 45s questioned for their survey had made no plan for future care. For over 75s the figure was almost identical.

Why might this be?

In the over 45s category, 23% stated that it was simply too depressing to plan for future care needs.

22% felt they were too young.

12% stated that the cost of care was simply too high to even consider planning.

Of those questioned that had experienced the care system, perhaps helping a friend or relative to find care, some clear messages emerged. The system is stressful, expensive, complex, and short of support.

Research from Nuffield Trust and The Kings Fund reveal that around two-thirds of those receiving social care are dissatisfied with it.

From JUSTs survey, 83% were shocked by the costs involved; 76% found the process of finding care stressful; and 73% found the care system complex and difficult to navigate.

Ouch! All pretty depressing…and there’s more…

Autumn 2023 should have seen the promised introduction of care cost caps and increased means-test limits. Where are they? Well, they are at least 2 years away having been pushed back to October 2025 at the earliest, after the next General Election.

Successive Governments agree that urgent reform of the care system is needed. Reality is that very little has changed in almost 25 years.

So, what does the current system look like? If that’s what we’ve got, let’s understand it a little.

The Local Authority (LA) will carry out a care needs assessment to see if the individual qualifies for care. If they do, they carry out a financial assessment looking at income and capital to determine to what extent the individual can contribute towards their care costs.

In England the capital threshold lower limit is £14,250. Where capital is below this figure, care costs are state-funded.

The upper limit is £23,250 above which you self-fund.

Between the limits there is an element of contribution from both sides.


Your home is often included as part of the financial assessment but there are circumstances where it will be excluded or ‘disregarded’. This might be where a partner or dependant continues to live there for example.

These numbers appear on the low side particularly when you start including property in the mix. So, what do care homes actually cost?

Of JUSTs over 45s, almost half thought a year in residential care would cost less than £25,000. Industry figures this year put the average at almost £60,000! That is just the average though mind…

Of that group who had helped someone find care only 19% were state-funded.

When it comes to paying for care many will use savings and pension income, and some will use proceeds from their house sale. Estimates are that owner-occupiers over the age of 65 have net housing wealth of £2.6 trillion, so in many cases the home forms a major part of the financial equation.

An individual’s home may not have to be sold to meet care costs due to the presence of something called a Deferred Payment Agreement. I will cover this in a later article on care planning, but basically it is a loan agreement with the Local Authority.

Ok, so it was not my intention to depress you so please accept my apologies if I have. There is help at hand and if you would like to discuss any aspect of the care system, care planning, or funding care, please do get in touch.

In my second article I will aim to lift the mood a little! I will look primarily at why planning for care is desirable and the options you might have available to make your plan.

For an initial discussion around either your own or someone else’s long-term care plans or requirements with a Society of Later Life accredited Chartered Financial Planner, please contact us on 0330 320 9280, email or complete our online enquiry form.

The content of this article is for information only and does not constitute formal financial advice. This material is for general information only and does not constitute investment, tax, legal or other forms of advice.

You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation.

Craven Street Financial Planning Limited is authorised and regulated by the Financial Conduct Authority.

Lee Hayward
Chartered Financial Planner & Senior Manager
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