When planning your finances, we all need to accept that there may be a time when we will need to have those decisions made for us by someone we trust. A power of attorney is a legal document that lets you appoint one or more people (attorneys) to help you make decisions or to make decisions on your behalf. This gives you more control over what happens to you if you are no longer able to make your own decisions.
You can use give your attorney the power to make decisions about:
Your home may be repossessed if you do not keep up repayments on your mortgage.
How you spend in retirement
In early retirement we typically spend as much as we do in during our working lives. This amount slowly decreases as we become older. However, care fees mean our spending rapidly increases at the end of our lives. As more of us are requiring care and for longer, this is more of a consideration than it has been in the past and impacts retirement planning in early retirement years.
What will I have to pay for?
The NHS pays for all aspects of medical care, and this is free at the point of delivery. For those unsure about who pays, it’s important to know that there are three types of care; social, registered nursing, NHS continuing healthcare.
The means test will look at the individual’s regular income (pensions, benefits and earnings) and capital (savings, investments and property). For example, in England if you have more than £23,250 then your capital is deemed to create sufficient income – on top of your pension and other income – to cover all of your social care costs. The chart below shows the regional variations in the means test for 2017/18.
| England | Scotland | Wales | NI | |
|---|---|---|---|---|
| Upper capital threshold | £23,250 | £26,500 | £30,000 | £23,250 |
| Lower capital threshold | £14,250 | £16,500 | £30,000 | £14,250 |
| Tariff income | £1 pwp £250 | £1 pwp £250 | NIL | £1 pwp £250 |
| Additional benefits | NIL | £171 + £78pw* | NIL | NIL |
* The £78 benefit is only payable for those who require Nursing Care.
** The above rates are the DWP rates applicable 2017 /18, and have been taken from each of Age UK’s regional websites
Find out more about your options for later life by booking an appointment with an adviser
Other than in Wales where the upper and lower limit are the same. In England, Scotland and Northern Ireland, we have to take the lower capital threshold into account. In these areas, £1 per week per £250 over the lower threshold is added to other income to assess affordability. The reality is that even when you reach £23,250 the capital erodes pretty quickly down to that lower threshold. Once this reaches that lower threshold then the capital is no longer taken into account.
This type of care includes daily living assistance – getting up, going to the bathroom, showering, dressing, feeding, etc. These are all daily living activities, and any care of this kind will need to be paid by the individual.
If they do not have sufficient income, then the local authority will pay this, assuming the individual is assessed as having “Eligible Care Needs”.
Their medication and the occasional visit from a nurse will be paid by the NHS.
The local authority will only pay £400-600 a week for a care home – and you have to consider do you want to be able to choose the home your loved ones will be placed in?
When an individual needs more help than can be provided by a GP and a visiting nurse, the social care aspects continue to be means tested if they have the income.
The NHS will then pay for the nursing provision.
In the UK that’s currently £155.05 per week. So if the cost of the care home or nursing home is £650.05 a week, then the NHS pays the £155.05, and the individual pays the £500 – or if they’ve run out of money, the local authority will top-up their income to cover that.
When the balance between social care and medical needs changes to where the medical needs outweigh the social care needs the NHS picks-up the entire bill.
There are a number of situations where arguments can break out about where the line occurs between social care and NHS continuing healthcare.
Sometimes this will take place after death using their medical records.
We take a look at the finances of three fictional heroes from the UK and discuss how financial planning could help them. While we had a lot of fun writing this article, it highlights several specialist areas of financial advice, and how versatile an adviser’s toolbox can be.
When looking at options for funding your retirement, it’s important to understand that your pension pot will be invested – and as with all investments, your capital is at risk.
When nearing retirement we face the challenge of ensuring our funds will last. Increasing numbers of UK homeowners have been looking for alternative methods to increase their income in retirement and are turning to their property to supplement their pensions.