Home Finance Using property wealth to fund later-life care

Using property wealth to fund later-life care

by Joe Caretalk

Claire Singleton, CEO Legal & General Home Finance

Funding care presents a significant challenge for people in the UK and the costs associated with residential care differ significantly based on personal circumstances, including where you live.

On average, people can expect to pay more than £800 a week for private residential care[i], which is more than double the average weekly income for people in retirement (£320), according to the Department for Work & Pensions[ii]. Analysis from LaingBuisson, who provide healthcare market intelligence, found that the cost of resident care varies widely depending on your postcode and the big regional differences often reflect the variation in local property values; with residential care in certain London boroughs being the highest in the country.

A recent report by the Equity Release Council, indicated that the cost and complexity of the residential care process can leave some people concerned about the most appropriate solution for them.

Our own customer data indicates that very few people currently access the equity in their homes with the intent of paying for care. Instead, one of the most common uses for equity release is home improvement, so it’s entirely possible that some people are accessing their property wealth in order to make adjustments to their home to allow them to ‘age in place’. This could include anything from swapping a bath for a ‘wet room’ style shower or installing a stair-lift. Indeed, we know that one of the most appealing elements of taking out a lifetime mortgage is the ability to access value in your home without having to leave it.

But as we look to the future, we anticipate that property wealth will increasingly become integral to paying for both at-home and residential later-life care. Firstly, our population is ageing, so people needing the sort of assistance that only full-time residential help can provide, will likely increase. We also know that care places are already in high demand – 1.3 million older people request care each year while only c. 700,000 get it[iii] – so we’re probably going to see the relative cost of care rise unless we see some sort of intervention into the social care system. In addition to these complicated factors, subsequent generations are likely to be far more reliant on using a range of assets to fund their retirement, as we see the retirement population shift to people that hold relatively smaller pension pots.

To reduce stress on the individual and their family, it’s important that people consider the role their home might play in funding their eventual care much earlier in retirement. To help people better navigate the complexities of care, Legal & General Retail Retirement recently launched its Care Concierge Service which offers a personal service to help people understand, find and fund later life care.

[i] LaingBuisson data, Average care home fees by Council with Adult Social Services Responsibilities (CASSR) for OLDER PEOPLE (65+) AND DEMENTIA 2019/20

[ii] Department for Work & Pensions, Pensioners’ Incomes Series: An analysis of trends in Pensioner Incomes: 1994/95 to 2018/19

[iii] Adult Social Care Activity and Finance Report, England – 2018-19 [PAS]

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