informed choice

Alternative Options

Care fees plans are not the only way to meet the cost of care fees.

When working with clients in this advice area we always consider the full range of options and these will include using savings to pay for care fees or investing capital with the aim of generating sufficient income to pay the fees.

Savings

Using existing savings to pay for care fees is the simplest and lowest risk option to consider outside of an immediate care plan.

The main risk associated with this option is that the money will eventually run out. This can result in the person requiring care having to move to a poorer quality care home in the future.

In this current low-interest rate environment the return from cash savings is potentially unattractive for many and lower interest rates accelerate the erosion of capital.

As part of the care fees planning reports we construct for clients, we have built a model to illustrate how long cash savings are likely to last and this can then be discussed in the context of likely life expectancy and what would happen if funds ran out.

Investments

Investing capital to generate income to pay care fees involves exposing money to a higher degree of risk in the hope of achieving greater returns and making the capital last for longer.

A popular investment option for care fees planning is the insurance Investment Bond which enables tax deferred capital withdrawals to be made instead of taxable income.

What is important is for all of the options to be considered in light of the individual circumstances and objectives. No two people are the same and therefore no single care fees planning solution is always suitable.

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