One of the great challenges for a financial adviser is that often, distracted by the hustle and bustle of everyday life, our clients focus on the moment, and forget to think about the future.
Those of us who do look into the future focus on our own future needs and retirement, but some new findings* from the investment provider and researcher Hargreaves Lansdown (HL) shows that we may have to look beyond our own needs, and also consider those of our close family – in particular our parents.
This relates particularly to the possibility that they may need care in later life, and that we may have to carry part or all of the cost.
Where will the money come from?
Care isn’t cheap these days.
Would you like to know the typical costs? You may wish to hold on tight to your chair to steady yourself now, as this may come as a shock. Basic residential care costs around £600 a week these days, and a nursing home costs an average of £800 a week.
However, if you live in one of the more expensive parts of the country, or your parent has complex needs, this can easily rise to £1,000 a week.
If mum or dad need a carer to stay at their home, this can easily cost between £1,000 and £2,000 a week.
They have even coined the phrase ‘catastrophic costs’ to indicate when the total lifetime cost of care tops £100,000.
Now, perhaps have a cup of tea to settle your nerves, before you read more.
How likely are you and your family to have to deal with this?
HL found that one in three people (34%) believe their parents will need paid-for care at some stage.
Can their parents afford it on their own?
Nearly half (45%) said their parents would have enough in savings to pay for it, although in many cases this applied only to a few hours of care each week in their home.
Paying for full-time care is a much bigger challenge.
A third (30%) believed they would have to sell the house, to meet those bills. However, one in ten (9%) believed they would have to foot the full bill, to organise care for their parents.
Government has been ‘humming and haa-ing’ about addressing the costs of care ever since the Commission on Funding of Care and Support (the Dilnot Commission) said that something urgently needed to be done – perhaps a cap on care costs.
That was 10 years ago.
Based on that ‘urgent’ recommendation, the government has taken until today to respond – and it’s nothing definite. The government says it’s ‘seriously considering’ making plans.
Is there a possibility we are going nowhere fast on this?
If you do wish to take steps now to plan ahead for your parents’ care costs, we can advise you on the options.
In England, your local council may, under certain circumstances, be able to chip in, or even cover the whole bill.
Then there are savings, as we mentioned, or alternatively your parent’s income from their pension (which you can access much more freely now) can help as well.
If you would like to discuss this and learn more, why not give us a call?
Hargreaves Lansdown: “A third think their parents will need care” July 2021
This article was prepared by AdvisorStream and is legally licensed for use by AdvisorStream.
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