Have You Budgeted For The Cost Of Looking After Elderly Parents?

As a ‘baby boomer’ (born in 1964) I knew that having children late in life meant I had to budget not only for my pension, but also for the costs of university fees for my children.

The costs of residential care are staggering

What I suspect many of us born in that era did NOT expect was that the costs of caring for our elderly parents would also fall to us.

This is not an issue whilst our parents remain well and able to live relatively unassisted in their own home.

But, once a care home is needed, the costs involved are staggering.

Currently the average cost of nursing home care in England and Wales is over £800 a week (or over £41,000 a year) per person.

This figure can be even higher in certain parts of the UK or where the elderly person’s needs are particularly severe or they need to go to a specialist Elderly Mentally Infirm home (for example if they have dementia)

There may come a time when we have to help our parents make some difficult decisions

As of April 2016, if a parent has assets which exceed the value of £23,250, they have to pay the full cost of their care and the family home will be included in the calculation of assets.

If their assets are below £23,250, they still have to contribute to the cost of their care from their capital until their assets fall to £17,000.

Once the £17,000 is reached, any extra income will be taken more or less in full to contribute towards ongoing care costs.

The total amount you may have to pay is currently capped at £72,000, but this amount is based on what your local health authority calculates the care is worth and does not include board and lodging costs.  You can find a good explanation here.

You can see that an individual’s entire life savings and assets can be spent in just a few months.

And what happens when the money runs out?

In the event that a parent suffers from a chronic, or life threatening illness, funding may be available from the NHS which currently offers Continuing Health Care Funding which will pay the full cost of care where the person’s need is primarily health based.

A second type of NHS funding called “funded nursing care” is available where the individual has nursing needs and is looked after in a registered care home that employs registered nurses.

Funded nursing care provides funding at a rate of £110.89 a week towards the person’s care costs which still leaves roughly £700 a week to pay.

Obtaining this funding depends, of course, on meeting stringent NHS criteria. 

For most of us, we are looking at the sale of the family property and relying on our parents' assets to be sufficient to give them the best quality care possible.

Once these assets have been used up, it is likely to be us who bear the financial burden, although some assistance may be available from your local authority.

You can see that if one of your parents needs to go into a care home but the other is well enough to stay put, there is a clear dilemma about whether or not the family home has to be sold.

Does the healthier parent come to live with you with all the extra costs that this would entail – extra heating, lighting and food costs, not to mention the cost involved in adapting parts of the home to make them safer for your mum or dad?

Balancing your monthly outgoings may be much more of a challenge and cut backs will probably have to be made. 

Should you need financial assistance to help your carry out these home improvements and adaptations, you can consider borrowing up to £7,500 with a guarantor loan from a credit company such as UK Credit loans.

A guarantor loan is a type of unsecured personal loan where you get a friend, colleague or family member to back up your application.  They must be someone who is willing to step in to pay your monthly repayments if you can’t pay.  You may find this additional safety net reassuring with so many demands on your purse from so many different directions!

We never know what is around the corner and I think it is sensible to have a conversation with your parents as early as you can about their wishes and the financial implications of requiring residential care.

Having looked into the funding of care home fees, I am aware that this is something I will need to research in much greater detail so that we can make some sensible financial decisions as a family. 

The information I have given here is the tip of the iceberg and, as we know from the 2016 Budget, schemes such as this are prone to be frequently changed and thesholds altered. 

This is a far better approach than having to deal with sudden illness or even a bereavement whilst trying to decide whether your parents’ home has to be sold or worrying where the extra money is going to come from.