Old age doesn’t come alone, writes Tony Watts OBE. 

One of the by products of extending life expectancies is that a great many of us will spend at least several years – possibly even a decade or longer – needing some form of health or social care support.

And while most of us conjure up images of spending our last couple of years in a residential or nursing home, and worrying about how we might fund that, the reality is that many of us will require support or care at home.

Assisted living at home, enabling us to remain living there independently for as long as possible, is not only the option of choice for most of us – it’s also the most economical. But it still has to be paid for.

The question is: by whom?

It used to be a fairly straightforward equation: if you had assets (apart from your home) above a certain value, then you yourself would foot the home care costs. Below that benchmark, and local authorities would provide the funding.

But now, the criteria that local authority applies before it will fund support means that even people with resources below the “cut off line” (£23,250) find it difficult to get the support they need. They either have to dip into what savings they have, get family to help out or do without.

For those going into a care home, the value of the house can also be taken into account if you do not have a dependent or partner living there too.

So the bottom line is this: Staying in a care home is expensive (allow between £30,000 and £40,000 a year, depending on where you live and your support needs). Care at home can add up too: anywhere between £11 and £15 an hour, depending on what part of the country you live.

Yes, you should get some support in the form of Attendance Allowance (either £55pw or £82pw, according to which level you qualify for). And, of course, you may be able to call on family to help.

There is also the chance that, should you be able to qualify, you may also receive nursing care contribution if you are in a registered nursing home. If you can meet certain health criteria, you may also qualify for NHS Continuing Care: but be aware that you may well need to really fight your corner to achieve that, quite possibly with the help of a specialist solicitor!

So in summary, how much you will need to spend, and for how long, are big unknowns.

The long promised care cap has been kicked into the long grass by the Government, so don’t expect any help from that direction. There is also the possibility that you could – at some point – take out a financial product to insure you against the costs of future care, such as an investment bond. 

That will provide you with some certainty, and will certainly be worth considering, but they obviously do not come cheap!

Many of us who are “asset rich and cash poor” may well look to making use of some of the value of our home in the form of equity release.

The takeaway message? If you are in a position to do, start factoring care costs into your retirement finances – perhaps as additional living costs past a certain age, releasing equity or purchasing a care plan bond.

Best of all, use the FREE  Retire Easy Life Plan to show you how using different forms of funding will affect your finances for the years to come: you’ll find helpful prompts to guide you.