Patrick Roach
Nusing Home Fees
A familiar figure was highlighted on the news the other day. Over 40,000 homes each year are sold to pay for nursing home fees. Nursing home fees are expensive which is not surprising when you stop to think about it. It’s a bit like staying at a two or three star hotel seven days a week, fifty two weeks of the year, but possibly needing assistance to dress, eat, bath and move from room to room.
Figures of £500 per week are not uncommon in the South West, possibly even more. That is £26,000 per annum. The government may provide limited assistance through a nursing allowance and attendance allowance. But generally if you have assets of more than £20,000 you will not receive a penny from the State.
The problem is exasperated by low interest rates. You would be lucky to earn more than 5.50% gross, 4.45% net from an instant access deposit account paying interest monthly. If the shortfall between your income, State support and the nursing home fees is £12,000 you would need to have £270,000 on deposit. And this amount would not be enough if nursing home fees increase, which they are tending to do, partly due to a shortage of nursing homes.
It seems grossly unfair that the money you were hoping to pass on to your children and grandchildren, or a favorite charity, should be swallowed up by nursing home fees. (Currently this does not apply in Scotland.) Various reports have come to the same conclusion since 1997, but it would be very surprising if the Government agreed to provide any meaningful financial assistance. It is already facing enough problems funding the NHS.
If preserving your capital (and consequently your income) is important, you need to invest in tax efficient arrangements designed to produce a relatively high level of income and some capital growth, probably from lower risk investments. It may also be necessary to include an immediate care fees insurance policy, or life time annuity, to under-pin the plan.
There may be an arrangement which has a better chance of preserving your capital than leaving it in a deposit account hoping that it does not run out.
Use our contact page to request further information about funding Nursing Home Fees. An initial discussion has no charge or obligation.