How much is the cost of care?

The old man and his son are walking in the park. A man hugs his elderly father. They are happy and s

Ask the expert at Smith & Pinching about the cost of care - Credit: Getty Images/iStockphoto

My father is in his 90s and is becoming increasingly frail. We’ve had a long chat about it and he’s agreed that it is time for him to go into a care home. My mother died a few years ago. He has a reasonable amount of money – about £300,000 in investments plus the house which is worth about £350,000 – so is expecting to pay for his care himself. However, he’s worried that the cost of care will seriously affect what he can leave to me and my brother. Can you give us an idea of what care will cost, please?

Jeremy Woodruff, Director and Chartered Financial Planner with Smith & Pinching

Jeremy Woodruff, Director and Chartered Financial Planner with Smith & Pinching - Credit: Smith & Pinching

Jeremy Woodruff of Smith & Pinching responds:

The cost of care varies according to the care home you select, the facilities they offer and the geographical area you are in. However, figures from the LaingBuisson survey of care homes 2020-21 show that the average self-funder pays around £944 per week for care in Suffolk. This equates to more than £49,000 per year.

This may sound like a frightening figure, but you must remember that this replaces his current living costs, so he won’t normally need to find an additional £49,000 per year.

You and your father might find it useful to go through a process of what we call lifetime cashflow planning. Using that, we can look at all his sources of income, his investment assets and the growth/income they generate, as well as the proceeds of selling his home, assuming that you plan to sell it. We can then project forward to see what impact that will have on his estate through the remaining years of his life.

Advice at this point is critical to ensure that he uses his assets and investments to best effect, to allow additional income to be generated. There may be potential adjustments, for example, that could be made to his pension income which might take up some of the slack.

It is possible to purchase special annuity policies called Immediate Care Plans, which allow you to ringfence the erosion of an estate. You purchase the plan for a capital amount, and it then provides a top-up to income for life. However, this may not be needed if sufficient other resources can be found.

I recommend you get advice from a Chartered Financial Planner at this stage, to work out the best route for your father.

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Any opinions expressed in this article do not constitute advice.

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