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Future thinking – Care planning: Part 2 – The planning phase

In my first instalment on care planning, I looked at some sobering statistics concerning people’s perspective and experience of the care system, and I touched on the thresholds used by Local Authorities (LAs) when applying their financial assessment, and the general cost of care.

In this article I will focus more on the planning need and outline some planning options.

We saw in the previous article that most people don’t plan for care. However, planning generally helps with control and choice. Consider going on holiday without planning. If you haven’t saved, your choice of destination will be limited, and if you haven’t planned, whilst it might feel like an adventure, rocking up in Dhaka without the necessary jabs and nowhere to stay might quickly feel like a mistake!

The absence of a plan for future care often means that the first contact an individual has with the care system is when they realise an ageing parent or relative can no longer cope and requires professional support. That sudden realisation can create a situation where decisions have to be made quickly at an emotionally challenging time.

Having identified a reason to plan, it may come as a surprise to learn that there are no products available on the UK market that are specifically designed to meet future care costs. For a short time, pre-funded care plans did exist, but they have not been available for some years having ceased due to the escalating cost of care and the higher premiums required to fund the insurance resulting from increasing life expectancy.

So, how can we plan? We might not even need care but if we do, we don’t know what sort of care we will need. As with many things in life, planning is about the possible need. We hope we never have a fire or a burglary at home, but we insure our properties regardless. We hope we never have a crash, but we insure our cars just in case, and we recognise the need to protect our loved ones in the event of our death, so they have the means to support themselves after we have gone…and so on.

In the absence of a ‘silver bullet’ product that meets the care planning need, we have to rely on more traditional products and self-discipline:

  • Building up savings
  • Investments
  • Pensions

The term savings is generic, and advisers will often talk about short-, medium- and long-term savings, and recommend different strategies and products to meet an individual’s different objectives over these timeframes.

Whilst we don’t know when care will be required, it is generally more likely that some form of support will be needed after the age of 65, so your age now will determine in part your ability to build a reserve to meet care costs.

So too your wealth, the means you have to build a reserve. Other factors will also impact your scope to make savings but if you are able to commit to regular and/or lump sum savings with a specific objective in mind, you are off to a good start.

Make care funding one of those savings objectives, and as with most things, the earlier you start planning, the better the outcome.

Thus, savings in this context could include cash in the bank or building society, NS&I, pensions, and investments.

Your financial adviser will help you identify which of these savings vehicles are most suited to your care plan objective alongside other objectives, considering factors such as your age, savings timeframe, affordability, appetite for investment risk and resilience to potential investment losses. They will consider your tax position and the tax efficiencies of using certain vehicles like pensions and ISAs. You may of course have existing savings vehicles that can be reviewed, adapted, or repurposed as part of the care plan.

So, you have spoken to an adviser, established a plan be it short, medium, or long-term, agreed a way forward and implemented the savings vehicle(s) appropriate to your circumstances. You’ve funded them and revisited that plan with your adviser periodically as agreed.

I sincerely hope that you never need that pot of money and that your health supports you right to the end. In the words of a famous Vulcan, ‘live long and prosper’. But if you do live long, you are likely to need some support before the end, so in my next two instalments I will outline some considerations when faced with the need to pay for care, and begin to look at how you might use your capital to support you whether you have managed to accumulate that well planned care fund or not.

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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