Just as with the position on state pensions, any retirement planning needs to take into account for a sizeable amount of money to be needed during retirement for nursing home costs.
According to the Association of Nursing homes, the average cost now of someone who needs to go into full time nursing care is £28,500 per annum. The likelihood of an individual needing to go into care is increasing year by year. The statistics show that 29% of all women will need full time care sometime in their retirement years and 11% of men. The average length of time in nursing care is also increasing with women who require care now needing some form of paid for care for a total of 5.6 years and men in the same situation for 3.2 years.
It is quite clear therefore that nursing home costs will be a factor for a growing number of people. Once again the question must be asked ‘can we expect any help from Government to help with these costs?’
For all the reasons already outlined, the answer must be NO. Of course at the margins Government may provide some form of minimum support for those who have no other money but in terms of funding nursing care for anyone who has any form of significant saving or pension income the answer must be no given the Governments perilous financial situation.
This means that individuals need to factor in the possibility of nursing home fees into their retirement plans. There are two ways of dealing with this proactively. One is to ensure there is sufficient money in the pot at retirement that can take care of nursing home fees for an individual or in the case of married couples for both individuals, or if this is simply too big a burden for an individual to take on in their planning, the alternative is insurance against nursing home costs.
We believe that this subject will grow and grow as property prices continue to fall. This is for the simple reason that over the last 10-15 years many individuals have been able to afford nursing home fees because the fees have been no more, and in many cases a great deal less, than the escalating value of an individuals property. So an individual living in a property worth £450K for example who is aged 82 who suddenly needs to go into care would have had a property that up until a years or so ago would have been escalating at 10%+ per year in value, creating an incremental value more than nursing home costs. This made it relatively easy for individuals to use their property to help fund nursing home costs, however, this position will not be sustainable should house prices not increase as they have done in the past or worse they start to fall quite rapidly.
We believe that nursing home costs and the affordability of such costs will be a much bigger issue in the next 10-20 years as the numbers of elderly people needing care will grow and the property option becomes less available.
Some form of nursing home provision must be built in to a decent retirement plan. |
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