Planning for care: Making later-life support part of your financial plan

While many people don’t rely on care later in life, planning for the potential cost of it could help you feel confident about the future and mean you have more options should you need support.

According to a December 2021 report from The Health Foundation, people are increasingly living healthier and more independent lives in their later years. Indeed, the proportion of older people who need social care has fallen.

However, as life expectancy has improved, the number of people who will need some form of care is likely to rise. The report suggests that between 2021 and 2046, the number of people aged over 85 in the UK will double to 2.6 million.

So, while needing care might not be certain, it’s important to plan for it. Last month, you read about some of the reasons why you might consider care now. Read on to discover how you may make it part of your wider financial plan.

Calculating a potential care bill

It can be difficult to calculate how much care services could cost. After all, it’s impossible to know what’s around the corner. Setting out your preferences and doing some research could be valuable.

To start, you might consider different scenarios to understand how you’d feel about the options. For example, you may answer questions like:

• If you’d benefit from nursing care, would you prefer to receive this in your own home or a care home?

• If you moved to a retirement village or care home, are there facilities you’d like to be near or have on-site?

• Could your family or other loved ones provide support if you lived independently, or would you be able to move in with them?

With your preferences set out, you can start to calculate how much the different options may cost. The cost of care varies significantly across the UK, so doing some research in your local area alongside reviewing average figures could be beneficial. 

Don’t forget you’ll need to consider how the cost of care is likely to change over the long term due to the effects of inflation. 

When planning for care, it’s also important to consider a range of scenarios. If you only expect to get by with minimal support that your family could provide, you could find yourself in a difficult situation if your needs are more complex.

Being thorough when creating a care plan may mean you have more options should you need care and, hopefully, reduce financial worries at a time that might already be difficult.

4 ways you could cover care costs

There are many ways you might cover the cost of care. Here are four of the main options you could incorporate into your long-term financial plan.

1. Ringfence a portion of your wealth

Perhaps the simplest option is to ringfence a portion of your wealth for care costs. For example, you might earmark a portion of your savings or investments for care should it be needed.

2. Create a regular income

Another option is to create a regular income that would be enough to cover care costs.

You might do this by purchasing an annuity with your pension, which would then pay an income for the rest of your life. Alternatively, you might adjust your investment portfolio to create an income stream.

Your financial planner could help you assess how to create an income that offers reassurance about the future if you need care.

3. Take out long-term care insurance

It’s also possible to take out insurance that will pay a regular income if you need long-term care. The income may be paid directly to your care provider.

If you’re considering this option, it’s important that you understand the terms and conditions before taking out insurance. For instance:

• What is the maximum monthly income it would pay out?

• Are there any restrictions on which care providers you can use?

• Under what circumstances would you be eligible to make a claim?

You may need to pay regular premiums to maintain the cover, which will vary depending on a range of factors, including your health and lifestyle. In some cases, you might make a one-off payment instead.

4.  Use your property

Your home might be one of the largest assets you own. According to the Halifax House Price Index in June 2025, the average home in the UK was worth almost £300,000. So, if you’re thinking about how to fund a potentially large care bill, don’t overlook property.

There are several ways you might use property wealth to fund care.

If you’re moving into a care home, you might choose to sell your property to cover the cost.

Alternatively, you may use equity release to access some of the money tied up in your property without selling it. This could be a useful option if you want to remain living in your home.

However, there are drawbacks to consider before choosing equity release. The most common type of equity release is known as a “lifetime mortgage” and involves taking out a loan against your home.

With a lifetime mortgage, you don’t have to make any repayments, and the interest is rolled up. Instead, the loan is repaid when you pass away or move into long-term care. As a result, the amount owed could be significantly higher than the amount you initially borrowed and could affect the inheritance you leave for loved ones.

Seeking tailored advice could help you understand whether equity release is right for you.

Contact us to discuss your care plan

If you’d like to review your existing care plan or would like our support creating one, please get in touch.

Next month, read our blog to discover some of the steps you might take to ensure your wishes around care are followed.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.

A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration.