Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

THEY say there are two certainties in life - death and taxes. That’s true, but there’s a new one to add to the list - the cost of care, certainly if you’re in England.

As we live longer the odds of needing care rises, whether that’s full-blown, full-time residential care or ‘at home’ help. Either one it is, someone has to pay the cost and with increasing numbers putting demand on social care resources, the burden is going to increasingly fall on our shoulders. Or rather our purses, to be more precise.

In reality, social care is rarely free; not in England at least. People living in Wales, Scotland and Northern Ireland have access to differing levels of social care. In England, more often than not you’ll need to contribute to the cost. How much depends on your needs and your financial means.

Crucially, the amount we’ll all have to pay in England is set to change. From October 2023 none of us will have to pay more than £86,000 towards care costs during our lifetime. Once you go over that threshold the costs will be met by local authorities.

Those with assets worth less than £20,000 won’t have to contribute to care costs, but any income they have may be included when it comes to ascertaining how much they should contribute. Those with assets worth between £20,000 and £1000,000 will be eligible for means-tested help toward costs from their local council.

What this all means is that if you own a property and/or have savings and investments you will be expected to stump up the first £86,000 - but this only covers the ‘personal care’ element, so things like help with washing or dressing, not living costs like food, energy bills or accommodation.

The average cost of home care is £15 an hour. So just two hours of daily home care could amount to over £10,000 a year. A live-in carer who looks after your needs up to 24 hours a day will cost more. On average you can expect to pay between £696 and £849 a week in a residential care home, while full-time nursing care ramps the cost up to between £969 and £1,075 a week.1

That’s a huge sum to take out of your pension income. That’s why it’s far better to start planning for these potential costs, long before you might need to pay them.

One way to save in a tax-efficient way, that doesn’t tie-up your money and still gives you the flexibility to use it elsewhere, if the need for long term care doesn’t arise, is by using your annual ISA allowance.

Saving up to £20,000 every tax year in a stocks & shares ISA means you can quickly save a substantial sum, to grow nicely over the years. With an ISA you don’t need to sacrifice large lump sums either. Make saving into an ISA manageable by saving as little as £25 a month.


1  LaingBuisson, Care Cost Benchmarks 2021

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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