informed choice

Inflation and the elderly

Age UK has estimated that the elderly are subject to much higher rates of inflation than the younger population.

They have estimated that the real rate of inflation for those between 65 and 69 is 3.3% above RPI which is currently 4.5%.

This makes the real rate of inflation for these people to be 7.8%.

This increases with age and for those over 75 it is estimated to be 8.6% per year.

Life becomes even more expensive for those reaching 85 when many will need care. Anyone with assets of more than £23,250 will have to fund the full costs of their care which can range from £30,000 to £50,000 per annum.

It is thought that over 40% of people now self fund their care in full.

There is increasing evidence that shows those who self fund their fees are in fact subsidising those funded by the Local Authority.

In some care homes those funding their own care are being charged £200 more each week for the same standards of care as those funded by the local authority.

Care home fees can escalate as much as 10% per year and this rate of inflation is almost certainly higher for those funding their own care than for those funded by the local authority.

In effect they are subsidising the whole system and the situation can only get worse as Local Authorities have to trim their budgets.

Photo credit: ccharmon/Flickr

A Vision for Adult Social Care

The government’s vision for adult social care services is due to be outlined in a White Paper to be published at the end of next year.

The White Paper, called “A Vision for Adult Social Care: Capable Communities and Active Citizens” is set to describe how the provision of social care services will be increasingly removed from local authorities and given to those actually receiving care.

This forms part of the Government’s ‘Big Society’ agenda and will set the challenge for local authorities to provide those who are eligible with a personal budget for care services by April 2013.

This personal budget will preferably be a direct payment.

Whilst the personalisation of care budgets is likely to be welcomed, it could create problems with elderly people having to manage their own budgets and directly employing those providing care services.

If this is the case, the role of the specialist care fees planner will become even more important, helping those receiving care (and their representatives) to manage financial resources and get best value for money.

Photo credit: Flickr.com Jim Linwood

60 homes a day sold to fund care fees

The Daily Mail is reporting today that more than 20,000 pensioners were forced to sell their homes last year to pay for care fees.

This means that an average of 60 homes are being sold a day to meet the cost of long-term care.

Since 2005, the number of people being forced to sell their property as a result of care fees costs has risen by 17%.

As the population in the UK continues to age, this trend is likely to continue, with more elderly people needing to sell their homes to fund the cost of care.

One interesting figure from the Daily Mail report related to the level of care fees inflation.

Over the past five years, the cost of care fees have escalated by more than 20%. They now stand at an average of £25,896 a year, although care fees can be significantly more expensive in some areas, particularly in London and Surrey.

As the rules currently stand in England, individuals with total assets exceeding £23,250 are expected to fully fund the cost of their own care. This asset limit includes property, with some exceptions.

A local authority will disregard the value of your property in certain circumstances where someone else lives there. Some examples include your spouse or partner, a relative over the age of 60 or who is disabled, where a minor (under the age of 16) who is dependent on you lives there or where a carer who has given up their own home to provide care lives in your home.

You can download a free copy of our guide to care fees planning here. Do contact us if you would like to speak to one of our specialist care fees planning advisers.

Photo courtesy of blech​.