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Within days of becoming Prime Minister, Andy Burnham promised to fix the social care system once and for all. While everyone hopes he’ll succeed where others have failed, given the scale of the challenge, it’s sensible to factor the cost of care into your own financial plans.
Not everyone will need long-term care, but the latest figures show that more of us are spending the later years of our lives in poor health. Research by Age UK found that healthy life expectancy over age 50 is declining, reducing over the past 10 years from 19.9 to 19.4 years for men aged 50-54, and from 21.1 to 20.6 years for women of the same age.
It also found that we're increasingly likely to develop multiple long-term health conditions such as diabetes, heart disease and arthritis as we age. At 50, one in five of us have multiple conditions and, by age 80, it's up to two in three people.
The probability of needing care as we age means it’s worth including it in your plans. “We’d encourage everyone to explore their care options,” says David Broome, Technical Advice Support Officer for Social Care at Age UK. “Knowing what’s available, the support you might receive, and the costs, makes it easier for you and your loved ones if you do need care in the future.”
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Long-term care takes many different forms. As well as nursing or residential homes, care can be delivered in your own home by a professional carer. Or, more informally, by friends or family.
The amount of care required can vary, too. It could mean round-the-clock nursing care. But it could also be a daily visit to help you get up, or a weekly trip to a local supermarket for your shopping. It could even be part of a package offered through retirement or sheltered housing, where you can tap into extra support if it’s needed.
The wide range of care on offer means costs vary enormously too. The average cost of a residential care home in England was £57,200 a year in 2025, according to figures from health market analysts LaingBuisson. For a nursing home, the average cost rose to £75,244 a year.
How much you pay varies around the country too. Average weekly residential care fees range from £569 in Yorkshire and the Humber to £1,234 in the East of England. And for nursing care, the averages range from £821 in Yorkshire and the Humber to £1,569 in the South East.
Home care costs vary too. Age UK says to expect to pay around £25 an hour for privately arranged care in your home, but the cost will depend on the type of care, where you live and when you need it. It’s not necessarily a cheaper option than moving into a home: having live-in carers can easily set you back £100,000-plus a year.
Help with care costs can come from different sources, but if you think you need care, your first port of call should be social services at your local council. They'll arrange a care needs assesment, to determine the services and support you need.
If care is needed, they'll run a financial assessment to determine whether you're eligible for help with the costs. This takes account of your assets, including the value of your home, unless you're having care at home or your spouse or partner is living there.
The figure will need to fall below the means test threshold to receive support from your local authority. This is £23,250 in England and Northern Ireland, £36,750 in Scotland and £50,000 in Wales.
Attendance Allowance, or Pension Age Disability Payment, in Scotland is available to anyone over state pension age with care needs due to a disability or long-term health condition. It's not mean-tested and you could receive between £76.70 and £114.60 a week, depending on the level of care you need.
The NHS might also help with care costs if you have complex health needs. In theory, NHS Continuing Healthcare (CHC) can cover care costs. Broome encourages everyone with complex health needs to seek an assessment, but adds that the threshold for CHC eligibility is high.
While your future care costs can feel overwhelming, Amy Grace, Director and Chartered Financial Planner at Five Wealth, recommends treating the costs in the same way as more general retirement planning.
She uses cash flow modelling with her clients to forecast their future financial position and determine whether any additional planning is required. “Most people spend more in the early years of retirement on holidays and leisure activities, then when they slow down so does their spending,” she explains. “Where a client is concerned about care fees, I keep the expenditure level so we can see what’s available.”
As well as keeping track of what you’ve put aside, Alice Haine, Head of Personal Finance at Hargreaves Lansdown, recommends taking every opportunity to boost retirement savings. “This could include upping your pension contributions after a pay rise or promotion, making the most of employer contributions, particularly where higher matching options are available, and ensuring savings and investments are structured as tax-efficiently as possible,” she says.
As it’s one of your largest assets, your home could be part of the care funding equation. Downsizing could release additional funds for future needs. Or you could consider equity release.
Grace says equity release has fallen out of favour, but it can still work well for some people.
“Equity release can provide an income stream or a lump sum, but it also enables you to stay in your own home,” she says. Where someone is moving to a care home, selling the home can often be the sensible option.
Some families may want to rent out the home to cover fees, but this can be risky, as rental income isn’t guaranteed and maintenance and repairs will also have to be considered.
A deferred payment agreement from your local authority is another option if you need care and don’t want to sell your home. Under these, the local authority covers your care fees by creating a debt against the property. This, along with any interest and administrative charges, is repaid when your home is sold.
There are also financial products that could help with care fees. In exchange for a lump sum, a care fees annuity will pay a guaranteed amount to the care home or care provider, tax-free, for the rest of your life.
Each care fees annuity is individually underwritten, taking into account factors such as your age and health. This means they should be matched to life expectancy but, if you die prematurely, your estate could be out of pocket. Sarah Coles, Head of Personal Finance at AJ Bell, says that, as life expectancies are often lower, they tend to pay much higher incomes than normal annuities. “It can be difficult for people to consider a care fees annuity because it does involve a significant outlay upfront but, if you expect to need care for a considerable period, it can pay off,” she adds.
Age UK, Carers UK and PayingForCare are useful sources of information on everything from the types of care available to how to fund it. Beacon, an Age UK partner, can provide advice on NHS Continuing Healthcare. Separately, a financial adviser can help with any funding queries you might have. Members of the Society of Later Life Advisers (SOLLA) specialise in the financial needs of older people.
It may also be sensible to speak to a solicitor to make sure your life admin is up-to-date. Having a valid will and a lasting power of attorney (LPA) in place will ensure your wishes are followed if you do need care in the future.
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