Elderly care costs to double by 2050
Long–term care costs are set to double by 2050 thanks to an ageing population.
Research from the Organisation for Economic Co–operation and Development (OECD) shows that even those on above–average incomes could spend 60% of their disposable income on care costs.
One in five people will need long–term care of the most expensive kind in the last years of their life, while half will need some sort of care, according to Saga. Yet "no–one has put anything aside for it," says Ros Altmann, Saga's director general.
The government does provide some financial assistance, although its restrictions mean the majority of people are unlikely to receive much state help. Current rules state that anyone with assets (including property) over £23,250 in England, £22,000 in Wales or £22,770 in Scotland will have to pay their own long–term care costs.
"In the UK, with the exception of a couple of cash benefits for the disabled, funding for long term care is really only for the very poor," says Francesca Colombo, senior health analyst for the OECD.
"The big difference between the UK and other OECD countries is that many other countries are now moving towards a universal system.
"It puts the UK closer in situation to the US where long–term care is like a safety net for those who really can't afford anything," says Colombo.
The OECD is calling for more financial assistance from the government but given its stretched resources, individuals will still carry much of the burden. Public spending on care for the elderly accounts for just 0.8% of the UK's gross domestic product (GDP) compared to 3.6% in the Netherlands and 3.5% in Sweden.
What can you do if you don't have provisions for long term care?
Selling your home
Many homeowners face the unenviable choice of selling their home to fund care at home or residential home costs. Legally if you have assets, including your home, above the government thresholds, you're not entitled to hold onto them.
Current rules state that anyone with assets over £23,250 in England, £22,000 in Wales or £22,770 in Scotland will have to pay their own long–term care costs.
If you don't want to sell outright, you could consider an equity release arrangement through your local authority. Your council pays your care costs and then deducts the money on your death, once your house has been sold.
Ensure you and any carers are claiming all the benefits you can.
Those who spend at least 35 hours a week time looking after friends or relatives could be eligible for the carer's allowance. They will need to care for someone who receives one of the following benefits:
-Disability living allowance at the middle or highest rate for personal care
-Constant attendance allowance at or above the normal maximum rate with an industrial injuries disablement benefit. Or at the basic (full day) rate with a war disablement pension.
The carer isn't eligible though if they earn above £100 a week, after tax, NI and pensions contributions.
The weekly rate is currently £55.55 although this is reduced in line with other received benefits.
Those aged over 65 or with a disability severe enough to require care may be entitled to the attendance allowance, which pays £47.80 a week for help in the day or night and £71.40 for 24–hour supervision.
Get further advice
There are a variety of organizations that can advise you more fully of your options depending on your specific circumstances:
The Organisation for Economic Cooperation and Development was established in 1961 to promote policies that will improve the economic and social wellbeing of people around the world. It uses a broad range of economic information and research to help governments foster prosperity and fight poverty through economic growth and financial stability and also ensure the environmental implications of economic and social development are taken into account. It can only make recommendations and has no powers of legislation; nor can it compel members to adopt any recommendation. Based in Paris, the OECD currently has 34 members, including the UK.
The total money value of all the finished goods and services produced in an economy in one year. It includes all consumer and government consumption, government spending and borrowing, investments and exports (minus imports) and is taken as a guide to a nation’s economic health and financial well being. However, some economists feel GDP is inaccurate because it fails to measure the changes in a nation's standard of living, unpaid labour, savings and inflationary price changes (such as housing booms and stockmarket increases).
A term to describe financial products or ‘plans’ that help older homeowners turn some of the value (equity) of their homes into cash – a lump sum, regular extra income, or sometimes both – and still live in the home. There are two main types of equity release: lifetime mortgages and home reversion plans (see separate entries for both). Whichever type you choose, you borrow money against the value of your property, on which interest is charged, and the loan is repaid when the house is sold after your death.