There was an interesting article in The Telegraph this weekend, looking at the shocking scale of care home fees inflation.
In the example used in the story, care fees had gone up by 129% since the resident entered the care home in December 2001.
As a result, fees had risen from £30,940 in her first year to £69,803 today.
During that same time, the Retail Prices Index (RPI) measure of price inflation had risen by just 40%.
Had RPI inflation applied to the care fees instead, they would be £42,000 instead of £69,803.
So why do fees for residential care tend to increase much faster than the average rate of price inflation?
It could be a simple case of supply and demand, with the availability of rooms (particularly in better quality homes) outstripped by demand from an increasingly ageing population.
As the Baby Boomer generation enters retirement, we expect to see care fees continuing to rise at a rate faster than price inflation.
The goods and services consumed by elderly people tend to rise in price at a much faster rate than those consumed by those of working age.
Fees inflation is an important consideration for those entering a care home, and something to factor in to a Financial Plan when deciding how fees will be funded.
While the average stay in a residential care home is between two and four years, during which time higher fees inflation has little time to really bite, many residents do exceed these averages and inflation becomes a bigger factor.
Do speak to us if you have any questions about care fees funding.
