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Should You Rely On Property To Fund Long Term Care?

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This content is for information purposes only and should not be taken as financial advice. Every effort has been made to ensure the information is correct and up-to-date at the time of writing. For personalised and regulated advice regarding your situation, please consult an independent financial adviser here at Castlegate in Grantham, Lincoln or other local offices.

Did you know that the average cost for a room in a residential care home is £45,760 per year? With such staggering costs, it’s little wonder that people here in Lincolnshire and across the UK are facing deep questions about how they will fund their long term care.

One natural option to consider (for owners) is to sell the home they spend a lifetime paying off, and indeed, this was an important reason why successive UK governments since the mid-20th Century have encouraged people to buy their own home. Today, this has resulted in a care sector worth £16.5 billion where 51% of the market is underpinned by private payers, rather than government spending. Yet is property the only option for homeowners when it comes to funding long term care? Are there ways to fund this without excessively eroding the value of the estate you hoped to pass on to your loved ones? What about non-homeowners?

We offer this short guide from our Lincolnshire financial advisers and hope you find this content useful and informative. If you would like to discuss your own financial plan a financial adviser in Lincoln, please get in touch to arrange a no-obligation consultation, at our expense:

01476 591022

Do some forecasting

To start making a sensible plan for funding long term care, it’s a good idea to first consider how much you are likely to need to save. Many factors will influence the costs you might end up paying, including (but not limited to):

  • Your current age. If you are still quite young, then the costs of later life care could be dramatically different in 20 or 30 years.
  • Your health and mobility. Sadly, the more health issues you have the more likely you will need to pay more for residential care.
  • The quality and type of care you want. A higher-quality care home will, naturally, cost more than one with a more standard-level service.
  • How long you might need to be in care. At present, research suggests that on average older people spend around 30 months in residential care. In the distant future, this might change, however, depending on advances in medical technology and other public health factors (e.g. obesity levels).

A financial adviser can help you estimate the likely costs you will face based on these and other important factors.

Develop a plan as early as possible

Sadly, the longer you leave it to plan your long term care funding, the more restricted you are likely to be in your options. So it’s a good idea to plan early; even those in their 30s and 40s can benefit from giving this their consideration. Fortunately, there are a range of options available to people who want to make provision for their future care. Below, we’ve listed just a handful of ideas to discuss with your financial adviser:

  • Savings and investment. For certain individuals, it might make sense to consider building an investment strategy which can build up savings for your future care, separate from your short term savings and pension pot. Here, you might consider different investment vehicles such as an ISA to generate compound interest over many decades, possibly building up a distinct portfolio worth hundreds of thousands to help fund future care.
  • Property. Our financial advisers would not necessarily advocate relying on selling your home as a first resort to fund future care, we recognise that this is often the best option for many people. If you have a home worth £500,000, for instance, then selling this and moving into residential care for your final years could conceivably cover the costs. However, this often leads to a huge reduction in the value of your estate and thus can leave far less (or nothing) to pass on to loved ones as an inheritance.
  • Care insurance. In certain instances, it is possible to buy an immediate needs annuity or immediate care plan that can cover care fees for the rest of your life. However, these are still in their infancy in the insurance industry and only a handful of providers offer them. To qualify for one, you must take a medical assessment and the costs will vary depending on these results and other factors. In 2019, for instance, a typical care annuity paying care home fees of £10,000 per year might have cost a lump sum of £130,000 if you were buying at age 70. In some instances this kind of insurance policy may be appropriate, but for others with different health needs it might make more sense to simply pay the care fees yourself, directly, out of your savings.


The UK still faces major problems to address with long term care provision and funding. In the future, perhaps government policy will bring more sustainable, fair and adequate resolutions which take the pressure off private payment. However, we must all prepare on the assumption that this might not transpire.

If you are interested in discussing your own financial plan or investment strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:

01476 591022