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Home is where the care is

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Key Retirement Solutions director Dean Mirfin says equity release will be the major route for people needing care who want to stay in their homes

Dean Mirfin

Dean Mirfin

The subject of how to fund long-term care is hugely emotive and one of the great political hot potatoes. The major reason for the apathy emanating from the population is the fact that there is no clear guidance from the Government, which leads the vast majority to sit and hope that the Government will pay for us all.

The Dilnot Commission no doubt provided interesting food for thought when it presented its findings and thoughts on the potential road/s ahead. The overriding issue is the fact that with our ever-growing ageing population, definitive answers and solutions are needed now to address the issue of how the costs of care will be funded.

First, we know that the Government is not going to pay. However, reticence on the part of the state to provide straightforward answers with regard to the reality of where we and the state stand on funding has resulted in a population that sits hoping and believing that somehow the state will provide.

It is now the time for honesty and clarity on the matter and this is what is expected of the Dilnot Commission in the long term. The reality is that the majority are going to have to pay for their care.

Shock, horror, this is already the case but we do not want to believe it. We will all have to make a contribution to the cost of care. This is the only way that what is seen as “the burden” of the cost of care can be effectively paid for without it falling on tomorrow’s workers, who are in reality financially broken.

Mirfin: ’The state’s reticence to give answers to where we stand on funding has resulted in a population hoping that the state will provide’

What are the options for those who will have to find funding? There have historically been a range of insurance options available but these have dwindled over the years due to lack of take-up. However, with clearer Government policy on the horizon, they are expected to return. The problem is that many do not necessarily have accessible cash available to meet the costs, so property will play a major part in helping to meet the costs of care. Tens of thousands of homes are being sold each year to fund care but there is a major tide of change occurring which will restrict this option.

Increasingly, more recipients of care want to stay in their own homes rather than move into residential homes. Many will need to utilise the value in their homes to help meet the costs of care.

For those receiving care in their homes, the major route to freeing up finance will be equity release. Many self-funders in residential care do not necessarily begrudge paying for that care by whatever means possible because being empowered with the ability to pay for the right care is seen by many as the major factor that outweighs the cost.

The hope has to be that Dilnot’s suggestions will be listened to by the Government and will finally empower the UK population to make decisions about their care and their finances rather than burying their heads in the sand and hoping that the state will provide.

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