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How can wealth managers help to close the care planning gap?

There is an increasing demand for housing solutions for later life living. However, from investment growth to estate planning and preparing for care, the later life living sector is one of the most complex areas to plan for. 

David Nugent, managing director at UK care advisory service Grace Consulting, tells us more about the sector, starting off the sheer size of the challenge the UK will face over the next 20 years. 

Can you put into context the magnitude of the requirement for care today?
“In the next 20 years, our population will age, with 50% more over-65s and 93% more over-85s. This is all great news as it is down to advances in medicine and lifestyle choices. However, it of course comes with its own challenges. In the later part of their lives, many are living with disabilities, such as dementia or arthritis, or the lasting impacts of a stroke or fall. And indeed, even those who are physically healthy may suffer with loneliness. This will result in a huge rise in care needs for a large part of the population. In England, more than 1 in 3 people aged 85+ will require some form of care.” 

What are the greatest challenges that individuals and families face when it comes to care?
“The answer to this is three-fold. 

  • The provision of care - There is an existing undersupply in care facilities in the UK and a lack of planning to increase this provision to meet the increasing demand outlined above. In fact, the provision has reduced over recent years with the number of care-at-home hours falling by 3m between 2015 and 2018, for example. Due to the lack of funding, private funders, who make up a substantial proportion of the total number in residential care are having to subsidise state funded spaces. This makes it even more important for people to ensure they are getting care that is right for them. 
  • Lack of information about care - The increasing need for care, combined with the longer amount of time people are spending in care, means that making care arrangements is a more important decision than it once was. However, whilst the Care Act has put a duty on local authorities to make information available to ensure people are aware of the options that may be available to them, in practice this information may be limited, or may simply signpost individuals to generic materials that are not tailor-made for the particular person or their circumstances. Similarly, those that search for information online are unlikely to find all the information they need, and there is no guarantee that what they do find is current or accurate. 
  • Cost - Care is expensive and in the last 10 years, prices have increased considerably faster than the Retail Price Index.” 

How can people deal with these challenges?
“The need for care is becoming one of the sad realities of modern living. The real challenge is turning this reality into a positive experience, not something that is bolted onto life in an emergency. The best way to achieve this is through forward planning and preparation. There are two main areas people should prepare for: 

The first is financial preparation. It is important to understand the funding provided by the state when it comes to care. Most funding is means-tested and in England, for example, local authorities do not typically provide financial assistance for anyone with capital over £23,250 (and if you’re looking for residential care, this will include the value of your home if you live there alone). There is some non-means tested support available in certain circumstances, but it is limited. 

Care options vary hugely of course, from assisted living to care at home and residential care, but to give you an idea, two hours of care at home per day could cost around £18,000 per year and residential care can cost over £65,000 annually. 

This means financial preparation for care needs to be considered early on and not just by the elderly. And importantly, people need to retain access to their money. We see many people who have prepared for legacy planning, resulting in funds being tied up in trusts, or families who have gifted money to their children and need to ask for it to be returned. 

The second crucial area of planning is practical preparation. This is wide ranging, but to give some examples:

  • Have conversations within the family about the individual’s expectations and wishes.
  • Have a needs assessment carried out to see if there are any early steps that can be taken to prevent some of the issues we have stated as being a cause for care needs, for instance, falls or loneliness.
  • Consider the different types of care available and if residential might be an option, research and select a preferred home. Many homes have long waiting lists and so joining this can give you far more choice in an emergency, you don’t have to take up a place if it is not needed.”

Nugent concludes: “On average, people spend two and a half years in careand that is a significant amount of time if you, or your loved ones are unhappy with the choice.”

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