An important part of care fees planning is understanding the shortfall between the cost of care and available income.
New research from Safe Home Income Plans (SHIP), the trade body for equity release product providers, has found that those hoping to pay for care from income and savings typically face a 26% shortfall.
The analysis of data found an average cost of £51,906 to cover the typical two year stay in a residential care home. During that same period of time, the average over-55 would only receive £27,796 in income, leaving a shortfall of £24,110.
This shortfall is often covered using savings and investments. The research found that this can usually provide an additional £10,468 of funding, which continues to leave a shortfall of £13,642 for the typical stay in a residential home.
These figures exclude the cost of any specialist medical care or assistance. There are also massive regional differences in the figures, with the biggest average shortfalls identified in East Anglia and London.
The cost of residential care is highest in London and the South East, but these regions tend to have people with larger incomes and available assets to cover the cost of care. Whilst there are still substantial shortfalls in the South East, the gap between cost and wealth is wider elsewhere.
Every person needing care finds themselves in a different financial position. Whilst shortfalls are often inevitable when assessing the cost of care and available funding, it is essential to seek professional independent financial advice from a care fees planning specialist to make the most of your income and assets.
