Care Costs - The Dilemma of the Unknown
Anyone who has been even just a little prudent and put something aside for retirement will likely breach the care self-funding figure of £23,250 and therefore be responsible for meeting care costs themselves. See my previous blog - Care costs - Reforms put into reverse Preparing for the possibility of care fee funding brings several questions to the fore.
- How much do I need to save?
- When am I going to need care?
- Am I actually going to need care?
All the above are unanswerable questions, they simply ponder the unknown.
Maybe the solution to the care funding problem and the wider issue of providing for later-life needs lies within the recent changes to pension rules introduced by George Osborne. Please refer to a previous article - Pensions have become exciting………………..honestly!
Pension savings plans now have great flexibility in terms of how, when and how much you can draw funds, thus making pension funds a valuable vehicle for funding care costs.
For example:
- Add extra to your pension fund throughout your working life with the government chipping in with their contribution (tax relief).
- Reach retirement and use the pension fund as spending money.
- If the need to pay for care arises then you can access the pension funds flexibly to assist.
- If you don’t need care and you pass from this world with monies still left in the fund your pension plan can pass down the family line without inheritance tax being deducted.
So monies saved within a pension arrangement are unlikely ever to be wasted and planning for later life in this way can bring about an enhanced retirement with less worry and lead on to greater family wealth.
It is important to be aware that withdrawals from pension funds in excess of any tax free allowance can have serious tax consequences and advice should always be sought.
Create, Enjoy, Retain