My mother is becoming increasingly frail and will soon need to have some form of care support. We had talked about her going into a care home when she became unable to look after herself but the recent COVID-19 outbreak has made us think again and we’d like to look at the possibility of getting a carer in to live with her. She is quite wealthy so I think she can afford a carer but can you give an indication of what it might cost? Also, is there any way to limit the amount that we need to spend on her care? She is concerned that if she needs a carer for many years, there will be nothing left to leave to the family.
Carl Lamb of Smith & Pinching Responds
The cost of care will depend on the type of care needed. Figures from Which! indicate that the average cost of care in a residential care home in 2019/20 in the East of England stood at £762 per week but that this increases to £921 per week if nursing care is needed. Care at home will vary: you could employ carers to come to her home for a certain number of hours per day, but if you feel your mother needs 24 hour care, then you may indeed need someone to live in. Which! indicates that an acceptable hourly rate for a carer might be at least £21.99 per hour (outside London) and that a live-in home care package, contracted through a care company, could cost up to £1,250 per week.
You could choose to employ a carer direct but it is important to realise that this will involve managing the tax deductions and National Insurance contributions for your employee through PAYE. Some carers may be self-employed in which case they would manage their tax and National Insurance themselves.
Clearly, costs at this level will make significant inroads into your mother’s wealth so it’s worth getting independent advice at the outset. It is possible to purchase a Care Fees annuity which is designed to provide a top-up to income for life. It is also known as an Immediate Care Plan; it requires a lump sum amount to purchase the annuity but might ensure that the erosion of your mother’s estate is limited.
The alternatives for funding care at home might be a change to the management of your mother’s wealth to produce more income, or perhaps the use of borrowing such as a lifetime or interest only mortgage. Do consider all the options – and get advice.
Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. Your home may be repossessed if you do not keep up repayments on your mortgage. This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
Carl is a Director and Chartered Financial Planner with Smith & Pinching