Preparing for adult social care is an important part of your financial plan, but how much it costs, who pays for it, and how many people need it, is often misunderstood.
Adult social care offers practical support to enable you to live independently. It can be provided in your own home, a care home, or elsewhere in the community.
The government recently decided to abandon planned reforms that would have capped individual adult social care costs at £86,000, after which local authorities would cover the expenses.
Additionally, the “Upper Capital Limit” – the asset threshold for council support – would have been raised to £100,000, rather than the current £23,250. This would have allowed more people to qualify for assistance and meant those requiring care would have been able to maintain more of their estate.
Without these reforms, many UK adults may face a heavier financial burden in their later years. Yet, recent studies reveal that a considerable number have not adequately prepared to cover the high costs of social care. At the same time, data also suggests that more people worry about paying for care than the actual proportion who will ultimately need it.
These two issues represent different sides of the same coin but are both indicative of there being common misconceptions surrounding social care.
No matter whether you or a loved one end up needing care, financial planning can offer you security and stability in later life. Preparing early can help minimise the potential impact on your estate, ensuring you are better equipped for any future care needs and your beneficiaries receive the legacy you intend for them to inherit.
Read on to discover two myths about later-life care everyone needs to know, and to find out how financial planning can alleviate your worries and improve your preparedness.
1. “As life expectancy rises, more people will need care”
Many people are concerned about either themselves or a loved one needing social care when they’re older, particularly in light of different forms of dementia becoming more common as life expectancy increases.
But it is a myth to think that more people living longer necessarily means more people in care.
A survey reported by FTAdviser found that 41% of UK adults are worried about their ability to afford the necessary costs for covering care if they were to develop dementia.
However, despite increasing life expectancy, the number of people accessing care is considerably lower than the number of people who worry about the costs of it, and the proportion of older people living in care homes has actually fallen.
Census data from the Office for National Statistics (ONS) reveals that the proportion of the population aged 65 years and over living in a care home decreased from 3.2% in 2011 to 2.5% in 2021.
Moreover, research from the Nuffield Trust indicates that between 2015/16 and 2021/22, the population of individuals aged 65 and older increased by 7.8%, while those over 80 grew by 8.8%. Despite this population increase, the latest data indicates that the number of people over 65 requiring care at home has remained relatively stable over the same period.
These statistics – which suggest an increase in the ageing population but a fall in the total demand for social care – can likely be attributed to improvements in living standards and healthcare. Such improvements have enabled many older adults to maintain their independence for longer and reduced their need for support in everyday tasks.
However, even though the proportion of older adults using social care has reduced, it is still important to plan for it as an eventuality.
By preparing both financially and emotionally, you can approach the possibility of needing care with greater confidence and avoid unnecessary worry. Taking proactive steps now helps ensure that, should the time come, you are well-prepared to handle these costs and decisions.
2. “All social care is provided by the NHS and is free at the point of use”
On the reverse side to those who worry about affording adult social care, are those who neglect to save for it. This is often due to a lack of understanding or the mistaken belief that it is provided by the NHS at no cost.
Research from the Local Government Association shockingly reveals that 48% of English adults report having little to no understanding of what “social care” entails, while only 13% claim to have a good grasp of the term. Alarmingly, 5% of respondents have never even heard of “social care.”
Additionally, the study found that 44% of people mistakenly believe that social care is provided by the NHS, and 28% think it is free at the point of access, both of which are untrue.
Without an adequate understanding of it, such individuals are unlikely to be prepared to cover the costs of social care efficiently.
Even those who understand that they will have to pay for care if they need it, often underestimate the costs.
The NHS estimates that the cost of hiring a carer to visit your home is approximately £20 an hour, though this rate can vary based on your location. If you require a live-in carer, the weekly cost starts at around £800, but it can rise to as much as £1,600 a week for more intensive care needs.
For residential care, the average cost is about £700 a week, while nursing homes typically charge over £850 weekly.
So, unless you fall below the Upper Capital Limit of £23,250, if you or a family member require social care, the costs are likely to be significant.
Indeed, a report in The King’s Fund found that around 1 in 7 adults aged 65 will face lifetime care costs of more than £100,000.
Understanding the potential cost of care is a crucial step in preparing for it, as it allows you to assess what resources may be needed and to explore options for covering these expenses.
Financial planning can prepare you for future care needs while protecting your estate for your beneficiaries
Whether you or a loved one will need adult social care at some point, it’s wise to plan ahead.
Funding for later-life care is just one important consideration, but there are others to address as well, including inheritance planning, keeping your will up to date, and registering a Lasting Power of Attorney (LPA) to ensure your preferences are respected if you’re unable to make decisions yourself.
Starting to plan early allows you to make informed choices that support both your financial and emotional well-being, as well as the future security of your loved ones.
Get in touch
A financial planner can assist with tailored strategies for budgeting care expenses, protecting assets, and planning for inheritance.
Our team of independent financial advisers in Lewes is here to support you in preparing your finances for later-life care.
To find out more, please get in touch by emailing us at financial@barwells-wealth.co.uk or by phone on 01273 086 311.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, tax planning, Lasting Powers of Attorney, or will writing.
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