When looking for ways to save money to pay for care home fees, it is important to know what options are available that could help you to pay for care. The cost of a care home room has risen by 5.6%– more than twice the rate of inflation – and the total price has now risen to more than £30,000 a year. Therefore putting money aside has never been more imperative.
Annuities are a popular choice and many have chosen to use these to ensure that they can afford the care that they need. Before you choose this option however, it is essential that you fully understand how pensions can help you, and whether or not this is the best path for your future.
What Are Annuities?
An annuity will guarantee that your insurance company will pay an income directly to you for the remainder of your life. These are available for anyone over the age of 50 who requires immediate care and this care can be in home or in a care home. The cost of a pension will depend on many factors including your medical history, age, sex and the amount of income that you will require and these costs can vary greatly.
Why Should You Consider Annuities?
Residential care home costs can range from £350 to more than £750 per week and the cost for nursing home care can be more than £1,000 per week. If you have to fund your care yourself and pay for that care on a weekly basis, meeting those costs out of your savings can be difficult to say the least.
Many consumers have been forced to sell their homes in order to meet these costs. Need care or long term annuities were developed to help citizens to fund these costs without having to sell their homes.
There are a couple of options regarding how your annuity will be paid. An escalated annuity will allow you to choose to have your benefits increased each year by inflation or a set percentage. Capital protection annuities incur an additional cost but ensure that up to 75% of your paid premiums are returned to your estate upon your death, minus any benefits that are received upon your death.
What Should You Do?
You will need to do a bit more research to determine if an annuity is right for your future care needs. As with any financial element, there are going to be pros and cons and this is not the right choice for everyone.
But please note- some people who pay their own fees can still claim some social security benefits. Check out charities such as The Alzheimer’s Society and Age UK for more saving advice.
Speak with a financial expert to learn more about this option and learn if it can provide you with the funding that you require for your long-term care.