SJP How much does social care cost?
There are many factors to take into consideration when choosing the care that is right for you or your loved one.
For many of us, it is probably something we will have had little experience of, however understanding how much care will cost is likely to be one of the most important points.
The types of care
How much your care costs will be determined by a number of aspects, but the first place to start is with the type of care you require.
Here we have listed various common types of care with an idea of typical costs. It should be noted that these are indications, and will not necessarily reflect the costs specific to your circumstances.
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Residential care (care home)
Independent living schemes
If you require some form of care but staying in your own home is not possible, but you are not ready to move into a care home, then ‘independent living schemes’ may be an option.
These are also referred to as extra or assisted care, sometimes also ‘retirement villages’. The facilities and choices vary considerably but do provide independent living, albeit with varying care provision. Schemes can be privately rented, shared or owned properties, or have a social landlord.
Your local district council’s housing officer should be able to provide information or you could contact a specialist housing service such as Shelter.
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Nursing care
Nursing care
Nursing care
Some residential care homes offer nursing care, but you will also find dedicated nursing homes offering more specific medical support with additional capacity. It is worth investigating this to ascertain your current and future requirements.
If your care needs include medical support then a nursing home would provide this, with registered nurses and a higher staff to resident ratio. Because of this extra support, costs are typically higher, averaging around £48,7241 per year. Again, costs will vary by region; in Northern Ireland it is around £38,2201 per year, Scotland is approximately £45,8121 and around £63,1281 per year in the South East of England.
It’s worth noting that some residential care homes offer nursing beds as well for those people whose needs are likely to change in the immediate future. These are often referred to as ‘dual registered homes’.
Source: Laing and Buisson Care Homes for Older People, 32nd edition, 2022
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Dementia care
Dementia care
Some care homes specialise in understanding the varied requirements of people with dementia.
With a progressive condition such as this, having the right support to adapt to changing needs will be an important factor to consider.
You may have a need for more specialist nursing care that provides a more secure environment for conditions such as dementia. Due to the level of specialist care required, costs are often higher, averaging just under £50,0001 per year for the UK, with the North East of England around £47,4761 per year, Scotland approximately £46,4361 and the South East of England around £64,0641 per year.
Source: Laing and Buisson Care Homes for Older People Report, 32nd edition, 2022
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Care in your own home (Domiciliary care)
Care in your own home (Domiciliary care)
For many of us who may need some form of care, having this in your own home is likely to be the first choice where possible.
Not only does it remove a great deal of stress and anxiety, but many local authorities try to support this for as long as possible as well.
Care at home could encompass a wide range of support, not just personal care. As we slow down, it could also mean a hot meal, laundry service, help with cleaning the house or even keeping the garden tidy.
As such, this can be difficult to quantify. However if you assumed 2 hours of care per day over 7 days, it could cost around £15,000 per year2 if your local authority is paying. If you are self-funding it could be significantly more than this.
Source: 2 Moneyadviceservice.org, 2021
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Independent living schemes
Independent living schemes
If you require some form of care but staying in your own home is not possible, but you are not ready to move into a care home, then ‘independent living schemes’ may be an option.
These are also referred to as extra or assisted care, sometimes also ‘retirement villages’. The facilities and choices vary considerably but do provide independent living, albeit with varying care provision. Schemes can be privately rented, shared or owned properties, or have a social landlord.
Your local district council’s housing officer should be able to provide information or you could contact a specialist housing service such as Shelter.
Independent living schemes
If you require some form of care but staying in your own home is not possible, but you are not ready to move into a care home, then ‘independent living schemes’ may be an option.
These are also referred to as extra or assisted care, sometimes also ‘retirement villages’. The facilities and choices vary considerably but do provide independent living, albeit with varying care provision. Schemes can be privately rented, shared or owned properties, or have a social landlord.
Your local district council’s housing officer should be able to provide information or you could contact a specialist housing service such as Shelter.
Nursing care
Nursing care
Some residential care homes offer nursing care, but you will also find dedicated nursing homes offering more specific medical support with additional capacity. It is worth investigating this to ascertain your current and future requirements.
If your care needs include medical support then a nursing home would provide this, with registered nurses and a higher staff to resident ratio. Because of this extra support, costs are typically higher, averaging around £48,7241 per year. Again, costs will vary by region; in Northern Ireland it is around £38,2201 per year, Scotland is approximately £45,8121 and around £63,1281 per year in the South East of England.
It’s worth noting that some residential care homes offer nursing beds as well for those people whose needs are likely to change in the immediate future. These are often referred to as ‘dual registered homes’.
Source: Laing and Buisson Care Homes for Older People, 32nd edition, 2022
Dementia care
Some care homes specialise in understanding the varied requirements of people with dementia.
With a progressive condition such as this, having the right support to adapt to changing needs will be an important factor to consider.
You may have a need for more specialist nursing care that provides a more secure environment for conditions such as dementia. Due to the level of specialist care required, costs are often higher, averaging just under £50,0001 per year for the UK, with the North East of England around £47,4761 per year, Scotland approximately £46,4361 and the South East of England around £64,0641 per year.
Source: Laing and Buisson Care Homes for Older People Report, 32nd edition, 2022
Care in your own home (Domiciliary care)
For many of us who may need some form of care, having this in your own home is likely to be the first choice where possible.
Not only does it remove a great deal of stress and anxiety, but many local authorities try to support this for as long as possible as well.
Care at home could encompass a wide range of support, not just personal care. As we slow down, it could also mean a hot meal, laundry service, help with cleaning the house or even keeping the garden tidy.
As such, this can be difficult to quantify. However if you assumed 2 hours of care per day over 7 days, it could cost around £15,000 per year2 if your local authority is paying. If you are self-funding it could be significantly more than this.
Source: 2 Moneyadviceservice.org, 2021
Independent living schemes
If you require some form of care but staying in your own home is not possible, but you are not ready to move into a care home, then ‘independent living schemes’ may be an option.
These are also referred to as extra or assisted care, sometimes also ‘retirement villages’. The facilities and choices vary considerably but do provide independent living, albeit with varying care provision. Schemes can be privately rented, shared or owned properties, or have a social landlord.
Your local district council’s housing officer should be able to provide information or you could contact a specialist housing service such as Shelter.
How do you pay for care?
Once you have a good idea of the type of care that meets your requirements, naturally the next question is to understand how to pay for that care.
The following sections consider some of the different methods that you may wish to explore, or discuss further with your financial adviser. Like most financial planning, what works for one person may not be suitable for someone else, so it is usually the case of finding the right solution for you and your circumstances. There could be advantages and disadvantages to any of these solutions. This is where a financial adviser can really help.
Also, it is worth noting that you may not have to fund all of your care yourself. See the section on Government and Local Authority Support for more information.
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Income
Income
Typically most care fees will need to be paid on a regular basis rather than a lump sum, so using a form of income makes sense.
You may receive sufficient income from pensions and existing savings and investments, or rental income from your home perhaps, to pay for your care in full or as a ‘top-up’. Alternatively, your family may be able to cover some or all of the cost.
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Savings
Savings
This could include money held in deposit accounts, cash, Cash Individual Savings Accounts (ISAs) and National Savings.
Very low risk, but with current rates of interest you will need to ensure your capital is not eroded too quickly.
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Investment
Investments
There are many possibilities here, from investment bonds and unit trusts to shares.
However, the investments that offer the greatest potential chance of growth are usually the highest risk, therefore a balance may need to be struck.
Where the investment is made into equities (i.e. shares, unit trusts), the risk is that the value and any income provided may fall as well as rise and you could get back less than the amount invested. This means that it will not provide the security of capital associated with a deposit account in a bank or building society. Also, if the income falls due to market volatility you may have to make up the shortfall for care fees on an ad-hoc basis.
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Immediate needs annuities
Immediate needs annuities
Also known as ‘care fees plans’, these are specialist insurance plans designed to convert capital into income to help meet care fees.
In return for a one-off lump sum you receive a guaranteed tax-free income for life, provided that it is paid directly to the care provider. This income can also be used to fund domiciliary care, as long as the provider is Care Quality Commission (CQC) or equivalent registered.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
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Using your property
Using your property
The first thing to mention is that for many people there can be a fear of having to sell your house in order to pay for care provision, which is understandable given the circumstances.
It isn’t always the case that you will need to do this, however if you choose to use your property, there are several options available to you that your St. James’s Place Partner can talk you through.
- Equity release*: This can be a complicated area, as it depends on whether you have a jointly owned property, with your spouse/partner still living there. This can enable funds to be released while still allowing the home to be retained and excluded from the financial assessment (however, the debt has to be cleared on the death of the second person). If you are the sole resident and moving into permanent residential care, then different rules may apply.
*This is a lifetime mortgage or home reversion plan. To understand the features and risks associated with such products, please ask for a personalised illustration. - Rental: Letting out your property could deliver a regular income stream but owners need to be sure that the net income after bills, and allowing for periods of vacant tenancy and management costs, will be enough to cover care bills. You may need to supplement the income from other assets. In addition you may also need to employ someone to manage the property on your behalf.
- Deferred payment agreements (DPA): The DPA enables you to access a loan from your local authority secured against your property. Interest can be accrued, and the entire debt must be repaid within 90 days of death. This is only available if you meet qualifying criteria. The terms may differ between England and Scotland, so confirm this with your local authority.
- Equity release*: This can be a complicated area, as it depends on whether you have a jointly owned property, with your spouse/partner still living there. This can enable funds to be released while still allowing the home to be retained and excluded from the financial assessment (however, the debt has to be cleared on the death of the second person). If you are the sole resident and moving into permanent residential care, then different rules may apply.
Income
Typically most care fees will need to be paid on a regular basis rather than a lump sum, so using a form of income makes sense.
You may receive sufficient income from pensions and existing savings and investments, or rental income from your home perhaps, to pay for your care in full or as a ‘top-up’. Alternatively, your family may be able to cover some or all of the cost.
Savings
This could include money held in deposit accounts, cash, Cash Individual Savings Accounts (ISAs) and National Savings.
Very low risk, but with current rates of interest you will need to ensure your capital is not eroded too quickly.
Investments
There are many possibilities here, from investment bonds and unit trusts to shares.
However, the investments that offer the greatest potential chance of growth are usually the highest risk, therefore a balance may need to be struck.
Where the investment is made into equities (i.e. shares, unit trusts), the risk is that the value and any income provided may fall as well as rise and you could get back less than the amount invested. This means that it will not provide the security of capital associated with a deposit account in a bank or building society. Also, if the income falls due to market volatility you may have to make up the shortfall for care fees on an ad-hoc basis.
Immediate needs annuities
Also known as ‘care fees plans’, these are specialist insurance plans designed to convert capital into income to help meet care fees.
In return for a one-off lump sum you receive a guaranteed tax-free income for life, provided that it is paid directly to the care provider. This income can also be used to fund domiciliary care, as long as the provider is Care Quality Commission (CQC) or equivalent registered.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
Using your property
The first thing to mention is that for many people there can be a fear of having to sell your house in order to pay for care provision, which is understandable given the circumstances.
It isn’t always the case that you will need to do this, however if you choose to use your property, there are several options available to you that your St. James’s Place Partner can talk you through.
- Equity release*: This can be a complicated area, as it depends on whether you have a jointly owned property, with your spouse/partner still living there. This can enable funds to be released while still allowing the home to be retained and excluded from the financial assessment (however, the debt has to be cleared on the death of the second person). If you are the sole resident and moving into permanent residential care, then different rules may apply.
*This is a lifetime mortgage or home reversion plan. To understand the features and risks associated with such products, please ask for a personalised illustration. - Rental: Letting out your property could deliver a regular income stream but owners need to be sure that the net income after bills, and allowing for periods of vacant tenancy and management costs, will be enough to cover care bills. You may need to supplement the income from other assets. In addition you may also need to employ someone to manage the property on your behalf.
- Deferred payment agreements (DPA): The DPA enables you to access a loan from your local authority secured against your property. Interest can be accrued, and the entire debt must be repaid within 90 days of death. This is only available if you meet qualifying criteria. The terms may differ between England and Scotland, so confirm this with your local authority.
Further support
The following pages will help provide more information on the various stages of putting care in place, and also answer some of the more common questions that most people have when researching social care options.
