How do we plan for old age?
I was talking to my cousin, Sally, the other day about the injustices and cruelties of old age. Her mother had just died and she was struggling to find words to comfort her heartbroken father as well as come to terms with her own grief.
The only saving grace was that her parents, like mine, enjoyed – and, in her father’s case, still is enjoying – a full and independent life in their own homes through a combination of luck, stubbornness and close friends and family.
It is a different story for so many who either have to put up with rotten care or watch 60 years of savings disappear in a few months as they pay for private care homes – and sometimes both. The care in these places varies from the appalling to the magnificent, and I have seen both extremes, but one thing you can rely on is the bill. Wherever you are in the country, a place in a residential care home is unlikely to be less than £600 a week – any medical or nursing care will be paid for by the NHS, but day-to-day care like cutting your toenails or washing your hair will be charged extra.
It is a hideous irony that men and women who deprived themselves of holidays and hairdos to save for their old age find those hard-earned savings disappear in the twinkle of an eye, paying for things they would far rather do for themselves if they could. Instead, they are forced pay the equivalent of a nightly rate in the Savoy Hotel to stay somewhere they would never choose for themselves.
Care in old age is not something you can reliably save for – you may die in your sleep at home or you may have a stroke or break a hip and need ten years’ care in a residential care home. Unless you are an eccentric millionaire or have psychic powers, it is impossible to plan and be able to pay for all eventualities. So what happens in too many cases is that the elderly end up having to sell the home they worked so hard to buy, and which they hoped to leave to their children or grandchildren, to pay for the last few months or years of their lives.
The Government has taken a small step this week in trying to remedy this by putting a cap on the amount a person will be expected to pay for their own care in old age. The suggested amount is £75,000, still a small fortune, but at least it is finite. It doesn’t solve the problem of paying for residential care, but sheltered and residential care homes, though expensive, do not attract the same level of bills as care homes. The downside is, of course, that this limit to care bills has to be paid for, and that will be done by keeping the threshold for inheritance tax at £325,000 per person, after which tax of 40 per cent will be paid on any money or assets left to relatives, rather than increasing it by inflation as happens now. That is expected to bring another 5,000 people a year into the inheritance tax-paying bracket, but on balance, it’s probably a fairer way of doing things than we have now. After all, we can’t see what the future holds for us healthwise, but financially we can look ahead with a bit of certainty. Houses can be given away tax free, so long as the giver lives for another seven years, and savings can be enjoyed or frittered away.
And for once, it might be wise to splurge rather than save – so why not think about arranging that weekend away, while you still have the money and marbles to enjoy it.
Let me know how you plan to spend your old age – and how you’re going to foot the bill.