Why Solid Pension Advice Could Save You From Retirement Poverty

Despite health concerns such as obesity, the UK nation is aging better than ever thanks to huge advances in medical science. In turn, our average life expectancy has now reached 80 years old, 8 years higher than what we were expected to live in the 70s. This is set to increase further in the next 20 years. Whilst this is great news in many respects, there are financial pressures arising from the growing number of elderly needing care.

The elderly are now living longer and consequently requiring care for longer than before. As a result many people are forced face the difficult decision of either receiving care at home moving into a care home to help with tasks such as washing, cooking and eating. Coupled with the increase in inflation, pension pots that the older generation have saved into are no longer adequate to cover the annual cost of living in a care home which is now nearly £20,000.

The government lends a small hand to aid those needing care. At present, elderly care needs is means-tested by the Local Authority in which you live and individuals are judged on two criteria; means and need. Anyone with savings over £23,250 must pay for their own support. This threshold figure includes the value of a property. Even if you clear this first hurdle of the means-test, the local authority is then only obliged to provide care if the individual meets certain needs. At the moment this is broken down into low, moderate, substantial and critical. The thresholds councils set will be decided upon their finances.

Only those who require substantial or higher care-needs will be provided with care packages from most councils. This leaves the elderly with low or moderate care needs either having to rely on family and friends to look after them, paying for care themselves or risk doing without any care.

Faced with the option of no care at all is a situation which should be avoided at all costs. Aging is an emotional process leading to heart wrenching decisions which can affect the whole family. The present situation means that many elderly who cannot afford to pay for long-term care are selling their property in order to cover costs. This is a catch-22 situation as state benefits such as heating allowance and pension credit are taken away when you do not live at home. Moving into a smaller home is another option but may prove unsatisfactory. If the elderly person concerned has to move to a more affordable area, or a different local authority which offers a more lenient needs-tested care package, it may mean moving away from those nearest and dearest. The re-mortgaging of homes or relatives of the elderly selling homes to compensate are also tough decisions which are being considered. Such drastic steps should not be made without talking to a pension adviser for easier options.

Seeking professional pension advice can help avoid these life altering decisions. Long-term care annuities now exist and could provide up to 40-50% more income than your existing annuity. Immediate Needs Annuities (INA) have been around for several years to provide an immediate income to cover the partial or total cost of care fees. An INA works by exchanging an initial lump some; its resulting income is then given straight to the care home provider, tax free. The annual income will depending on the size of the lump sum and the purchaser’s impairment or gender. The benefit of an INA is their income is substantially higher than a standard annuity.

Tailored INAs available on the market now also take the life expectancy of the purchaser into consideration. If he or she lives longer than expected, an INA annuity will continue to work to cover care-costs. Many specialised INA annuities on the market also offer money-back guarantees if the purchaser unexpectedly dies. If this happens within the first 6 months of the annuity being purchased then part of the initial up-front some will be returned. Different INAs will offer varying percentages of the lump-sum returned, from 25%-100%, obviously effecting the initial down payment.

Growing old gracefully is something which we should all be entitled to. There are many options available to the individual and their families involved should the need arise for long-term care. Specialist pension advisers will access your personal and financial circumstances to decide on the best long term care annuity scheme; before you have to make any drastic decisions.