Later life care is important to factor into your retirement planning, whether you’d like to guarantee first-class support for your relatives or ensure your retirement needs will be taken care of.
In many cases, care costs are forgotten in retirement planning, with potentially grave consequences, the ideal being that you’d never need to use your contingency budget. With average nursing home fees in the UK reaching just under £1,000 per month and up to £2,400 a week for the most sought after private facilities, it’s an important consideration.
Those costs may look very different in an overseas country, or there may be no state provision at all, making the need to prepare even more vital for British expatriates. Exceptional home care, custom support and private medical treatment could increase that budget many times over.
Let’s look at some options to consider including in your latter life strategy and some factors that will help support your long term financial security.
Average Later Life Care Costs
Whatever your age, when you look at investment plans or financial approaches, the aim is always to provide the best quality of life for yourself and your loved ones.
Many expats face a challenge when appointing trusted, high-quality carers to look after their elderly relatives. The complications of cross border transactions may add to the strain of what is often an emotionally difficult time. It is wise to research the anticipated costs of your own care to ensure you’ve budgeted appropriately to secure the living standards and lifestyle you aspire to in later life.
How to Calculate a Later Life Budget
A lot depends on your location, but as a rough idea, we’ve collated the average costs of medium-level care facilities in some of the most popular expat destinations:
- Spanish care facilities cost between £1,500 and £1,900 a month
- Residential care in Portugal comes in at £2,200 to £4,400 per month.
- Canadian residential care costs range from £862 to £2,670 a month.
Specific costs depend on the area, and accommodation quality, but over, say ten years, primary level care in these three countries is at least £15,000 to £44,000, ignoring any other outgoings, expenses or living costs.
Note that there isn’t any reciprocal agreement between the UK and other countries, so you’ll need to cover the costs independently if you need support abroad.
The Value of Power of Attorney
We’ll come onto potential ways to invest for your future care, but one crucial step is to think about Lasting Power of Attorney (LPA).
Having a designated attorney, usually a trusted family member, protects your interests and ensures that you have control over who makes decisions about your care or finances if you are unable to do so. LPAs must be registered when you have the appropriate capacity, so it’s well worth doing now, rather than waiting until a crisis.
It’s also important to ensure your Will is legally valid and up to date, making life easier for family members to respect your wishes and ensure your estate is distributed as you require. This process becomes more involved for expats, since dual Wills, in the UK and your host country are typical – but any inconsistencies can cause considerable delays and conflict.
Please get in touch with Chase Buchanan at any time to discuss the best strategies for creating an LPA agreement or download our complimentary Retirement Planning Guide for further information.
Strategies for Later Life Care Budgeting
Life doesn’t always work out equally, so there’s no telling whether one person may need years of quality care, and another might remain healthy and active so it’s important to ensure you aren’t left dependent on state care facilities or struggling to maintain your health in the retirement years you should enjoy.
Fortunately, there are many ways to incorporate a later life care budget into your plans, alongside other tasks such as succession planning, let’s look at a few of the typical options:
Annuity Products
A fixed annuity pays out a static monthly value, and while they aren’t insured, they are generally safe investments but there are some caveats:
- Some annuity products earn little or even no interest.
- Guaranteed income may not keep pace with inflation.
- Depending on the annuity type, it may not provide a death benefit to your recipients.
- As an expat, tax relief regulations may mean that the benefits of an annuity are far better replaced with an investment option suited to an overseas resident.
If you’re considering buying an annuity, you must seek independent advice to ensure the product is suitable for your needs and offers competitive returns, particularly if you move abroad before starting to take pension income.
Guaranteed Income Investments
Guaranteed investment bonds can be an option, with fixed interest payments made periodically, so you know what to expect. Secured interest rates are agreed in advance and it can be a valuable investment opportunity.
There are countless investment options available, and it’s essential you select a fund that facilitates payments to and from your home country without attracting tax liabilities.
Defined Benefit Pensions
If you are fortunate enough to have a defined benefit pension, it is critical you seek guidance before transferring that pension overseas. The security of pension income each month might be more advantageous than another investment, so you should only consider a change if you have certainty of beneficial returns.
Read more about international pension transfers in our SIPPs vs ROPS Guide.
Investing for Later Life Care
As we’ve shown, these common solutions are far from a one-size-fits-all resolution.
Some may be more relevant depending on your residency status, financial liquidity, wealth management strategy and investment portfolio, but in all cases, a consultation with the Chase Buchanan team is highly advisable.
Our consultants provide:
- Forecasting scenarios, help evaluating your income, assets, and expenditure to calculate any potential shortfall and the required returns.
- Investment recommendations to ensure your portfolio is geared to an acceptable risk level and expected to provide requisite income to cover any shortfall identified.
- Advice on property assets and the options to use those assets to supplement your income or capital wealth, whether your property is in the UK or overseas.
- Taxation guidance, working through strategies to safeguard your wealth for the next generation, and protect your estate from unnecessary inheritance taxes.
Please get in touch with the experienced team at Chase Buchanan for more information about we will arrange a convenient time to discuss and get you on the path to making sound decisions for the long term.