Take care of No1
It is worth starting to plan for long-term care early
Saturday 15 February 1997
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.
27 February 2015 07:30 PM
27 February 2015 07:30 PM
27 February 2015 12:01 AM
The NHS is currently bearing a yearly burden of approximately £1.5bn treating cold-related illnesses every winter
26 February 2015 04:17 PM
Hundreds of thousands of people's policies were hit when the mutual insurer almost collapsed at the turn of the century
27 February 2015 12:01 AM
The Department for Work and Pensions has been slammed after a series of cock-ups left an elderly pensioner £26,000 worse off.
24 February 2015 08:57 AM
A 20-month investigation concluded that a lack of price competition between lenders has led to higher costs for borrowers
23 February 2015 04:02 PM
The Financial Conduct Authority said the industry needs to start thinking about solutions to these challenges
20 February 2015 08:00 PM
In 1999 stock markets quickly tumbled, losing many a fortune in the process
20 February 2015 08:00 PM
13 February 2015 08:00 PM
13 February 2015 08:00 PM
06 February 2015 09:00 PM
Phoenix Life: Chance of a refund for overcharged policyholders has risen
10 tips for taking out a personal loan
Has your Premium Bond won the £1million jackpot?
There are 'dark corners' of the investment and pensions industry, says Pension Minister
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
- 1 What happens to your body when you give up sugar?
- 2 Licence fee: What is the BBC charge – and how will the changes affect you?
- 3 This is what the photographer has to say about the picture of a weasel riding a woodpecker
- 4 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Durham Free School: 'Creationism taught at' free school facing closure
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
iJobs Money & Business
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...
£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads