Take care of No1

It is worth starting to plan for long-term care early

Killjoy. That is the name used to describe someone who repeatedly spoils everyone's fun - such as referring to the possibility that at a late stage in many people's lives they may need help in looking after themselves. And pointing out that this care may prove highly expensive.

Even so, it is better to be a killjoy at times than to pretend that there is nothing to worry about when it comes to looking after oneself in old age.

The evidence points to the fact that we all live longer today than even a decade ago - up to the age of 80 and beyond, on average. Most of us will still be fit at that age. But some will require help with their daily living needs.

At present, the average costs of full-time care are about pounds 17,000 a year, while the cost of care in one's own home can rise to pounds 30,000 if two carers are needed.

Despite changes announced by the Chancellor in the November 1995 Budget, a local authority will only contribute totally to these costs if an individual's total assets are pounds 10,000 or less. Anyone with assets of up to pounds 16,000 is means-tested, while the entire cost of care is recouped by the local authority if assets are over that amount.

The cries of anger from many who discovered that their homes were calculated as assets led the Government not only to increase the lower limits before income was assessed from pounds 6,000 to pounds 10,000, as stated. It also provoked a promise to review the provision of long-term care funding, to see whether incentives could be given to people who are prepared to provide some form of private cover for themselves.

Last year, Stephen Dorrell, the Health Minister, proposed tax incentives to help out. For every pounds 1 of insurance cover, an extra amount of assets can be kept on top of those already allowed.

If the "disregard" is pounds 1.50 for every pounds 1 of cover bought, a person would be able to protect pounds 70,000 of assets before being means-tested.

Another variation floatedlast year would involve a policy being taken out for a limited period, say four years. In return, a higher amount of assets would be disregarded, say pounds 25,000, plus an additional pounds 1 for every pounds 1 of cover taken.

David Aaron, an independent financial adviser at The Aaron Partnership in Milton Keynes, points out: "[These schemes] are aimed at people who are moderately wealthy, say owning a property worth pounds 100,000, but not for those with more substantial wealth."

Nor are they much use to low-asset families, who will presumably continue to be means-tested and get relatively inferior nursing care because they cannot afford better.

In any event, a draft Bill on long-term care is due next week. However, given the proximity of a general election, there are doubts as to whether it will ever make it on to the Parliamentary slipway.

If reliance on the state to fund the cost of long-term care is increasingly less of an option, what are the alternatives? Mr AAron suggests there are several.

The first is to maximise savings, possibly by adding to one's portfolio so that the funds can be used to pay for care when it is needed. Although this is a helpful start, the cost of care can rapidly dissipate even large amounts of money.

Pensions also offer benefits, in that contributions to them are tax-deductible and the investments grow in a tax free environment. The problem is that most people do not fund enough to provide themselves with a decent income, let alone the extra needed to pay for care. Nevertheless, an increase in pension contributions is useful too.

At retirement, a lump sum is often paid as part of a pension. This can be used to pay for an annuity, a further annual income, or invested until a person needs that money to pay for long-term care, when an "impaired life" annuity can be bought.

A man in good health aged 80 with a pounds 100,000 lump sum can secure an income of pounds 13,000 net of basic tax. An impaired life annuity, perhaps because he has suffered a stroke, will pay pounds 21,000 a year, Mr Aaron points out.

The final option is insurance, protecting oneself against the possibility of needing care. The odds here are at present five to one against needing care.

There are several companies offering this type of cover, including Commercial Union, PPP Lifetime, Hambro Assured, Prime Health, Scottish Amicable and Bupa. Choosing between them is a job for an independent adviser.

The most important thing, as our table shows, is to begin to plan early. The younger you are the less it costs - even if you are accused of being a killjoy for pointing it out.

For a free 'Guide to Long-term Care', call the Aaron Partnership, 01908 281544.

News
Jennifer Lawrence was among the stars allegedly hacked
peopleActress among those on 'master list' of massive hack
Sport
Radamel Falcao
footballManchester United agree loan deal for Monaco striker Falcao
Sport
Louis van Gaal, Radamel Falcao, Arturo Vidal, Mats Hummels and Javier Hernandez
footballFalcao, Hernandez, Welbeck and every deal live as it happens
Voices
A man shoots at targets depicting a portrait of Russian President Vladimir Putin, in a shooting range in the center of the western Ukrainian city of Lviv
voicesIt's cowardice to pretend this is anything other than an invasion
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
people'It can last and it's terrifying'
Arts and Entertainment
booksNovelist takes aim at Orwell's rules for writing plain English
Arts and Entertainment
The eyes have it: Kate Bush
music
News
Fifi Trixibelle Geldof with her mother, Paula Yates, in 1985
people
News
i100
Finacial products from our partners
Property search
Money is slipping through our fingers: the UK is falling behind other countries in the amount we put away

How to save money: UK is crashing down the European league table for putting money away

The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options

Energy firms found guilty of bad practice could have licences revoked under Labour government

Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator

A student's guide to financial survival: You don't have to drown in debt at university

Fresh from A-level delight, the moment does not have to be soured by students resigning themselves to thousands of pounds worth of debt in three years' time. Rob Griffin sees how to pass the university challenge

'Dismal' eurozone data sparks concerns

European Central Bank chief Mario Draghi is under pressure to launch promised stimulus before the EU slides further
Love but not marriage: property is one area where cohabiting couples are in danger of losing out

How couples can protect their financial interests when cohabiting

People who simply live together cannot assume they have the same rights to each other's assets as spouses or civil partners. Michelle McGagh sees how they can protect their financial interests

India could be jewel in the crown for investors

With a new government and an ambitious prime minister, the country offers the prospect of strong returns. But there may be hiccups ahead, warns Simon Read

Child Maintenance Service to replace Child Support Agency - but is it better?

Reforms to the vexed question of child support payments by absent parents mean extra charges for both sides. Neasa Macerlean reports

Barclays's new life insurance heralds a revolution on the high street

The new product marks a shift towards 'clear, straightforward and standardised' banking products, says Simon Read

How to protect your assets if the stock markets begin to head south again

Are you worried about your portfolio? Nick Paler asks fund managers and investment insiders for advice
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Application Support Analyst / Junior SQL Server DBA

    £40000 - £45000 per annum: Ashdown Group: An established professional services...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Business Development Manager / Media Sales Exec

    £28 - 32k + Uncapped Commission: Guru Careers: A Business Development Manager ...

    C# .NET Developer (PHP, Ruby, Open Source, Blogs)

    £40000 - £70000 per annum + Bonus+Benefits+Package: Harrington Starr: C# .NET ...

    Day In a Page

    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York
    Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

    'I like Orwell's writing as much as the next talented mediocrity'

    Will Self takes aim at Orwell's rules for writing plain English
    Meet Afghanistan's middle-class paint-ballers

    Meet Afghanistan's middle-class paint-ballers

    Toy guns proving a popular diversion in a country flooded with the real thing
    Al Pacino wows Venice

    Al Pacino wows Venice

    Ham among the brilliance as actor premieres two films at festival
    Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

    Neil Lawson Baker interview

    ‘I’ve gained so much from art. It’s only right to give something back’.
    The other Mugabe who is lining up for the Zimbabwean presidency

    The other Mugabe who is lining up for the Zimbabwean presidency

    Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
    The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

    The model for a gadget launch

    Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
    Alice Roberts: She's done pretty well, for a boffin without a beard

    She's done pretty well, for a boffin without a beard

    Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
    Get well soon, Joan Rivers - an inspiration, whether she likes it or not

    Get well soon, Joan Rivers

    She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
    Fashion walks away from the celebrity runway show

    Fashion walks away from the celebrity runway show

    As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
    Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

    Meet the stars of TV's Wolf Hall...

    ... and it's not the cast of the Tudor trilogy
    Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

    Europe's biggest steampunk convention

    Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
    Don't swallow the tripe – a user's guide to weasel words

    Don't swallow the tripe – a user's guide to weasel words

    Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
    Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

    Daddy, who was Richard Attenborough?

    The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor