Long-term care is a vital consideration for anyone looking to protect their finances and maintain a comfortable lifestyle if health needs change over time. Many people focus on day-to-day matters and delay setting money aside for care. But the reality is that future needs can arise, and securing the right support in advance can make a significant difference. We believe in helping you plan for life’s different stages so you can make the most of your later years.
Understanding long-term care funding in 2025/26
You may be aware that care costs vary depending on your personal situation. However, getting a rough idea of how funding is calculated is useful. In England, individuals with assets (including property and savings) worth more than £23,250 usually pay the full cost of care, and those with assets between £14,250 and £23,250 receive part funding from the local authority. If your assets fall below £14,250, the local authority tends to cover most care costs. These thresholds have existed for several years; current indications suggest they will remain at similar levels. We encourage you to complete a financial assessment (means test) for social care to understand your funding eligibility and plan accordingly.
Paying for care can be complicated. Some individuals assume that the NHS or local authority will automatically fund all care, but that might not be true. NHS Continuing Healthcare is offered only if you have certain ongoing health needs, and not everyone qualifies. The application process can be lengthy and detailed, so it’s wise to review your options early.
Personal allowances and pensions
The government’s income tax personal allowance is currently £12,570 for 2023/24. It’s expected to remain unchanged until 2025/26 under the government’s current threshold freeze. The threshold for higher-rate tax is also likely to stay at £50,270, though official announcements will confirm figures closer to the time. These frozen thresholds may affect your disposable income, especially if you rely on pensions and investments.
If you have money set aside in a pension pot, you can start accessing it from the age of 55 (rising to 57 in April 2028). However, drawing significant amounts in one go can lead to higher tax charges, so we suggest balancing immediate needs with long-term financial health. For many people, a mix of pension income, investments, and insurance provides a sound framework for care funding. We also recommend considering how any tax rate changes or allowances affect your overall planning.
Protection through insurance
Several types of insurance exist to support long-term care. Some are designed to pay a regular income if you require assistance with daily tasks, while others provide lump sums or specific care-related payouts. Certain plans can cover home adaptations or specialist equipment. It can be helpful to review these options early so you’re not forced to make decisions quickly in later life.
Although insurance does involve monthly premiums, it may protect your estate over the long term. If you are unsure which option might be right for you, we can provide balanced guidance that considers your circumstances.
Preparing for potential care needs
We encourage you to take a practical approach. You may feel reluctant to think about possible changes to your health, but small steps now can offer reassurance. For example, consider assigning a Lasting Power of Attorney (LPA) to someone you trust so they can make decisions on your behalf if you cannot do so. This legal arrangement can cover both financial and medical decisions. You can find details on how to set this up at the official HM Courts & Tribunals Service pages.
We also suggest looking at your current cashflow. Monitoring your monthly spending and saving patterns can help you anticipate potential care costs. Drawing up a personal budget allows you to make adjustments on time.
Using property assets
Many people use the equity in their homes to meet care costs. Consider downsizing, equity release, or selling a second property if you have one. Each route has advantages and possible drawbacks, so comparing options carefully is important. We can discuss these paths with you and outline any potential tax implications. While property values can rise over the long term, relying solely on them may leave you vulnerable if the market changes. Spreading risk across different asset classes can help safeguard your wealth over time.
Seeking balanced advice
We see long-term care planning as part of a wider financial roadmap. By combining pensions, investments, insurance, and tax-efficient strategies, you can increase your chances of covering care costs without depleting all your savings. Our approach is client-focused. We base recommendations on your objectives rather than steering you towards any product. You can learn more about how we tailor our strategies by visiting our services section.
Regular reviews and updates
Financial circumstances evolve. Pensions grow or contract, investments fluctuate, and your personal situation can change. We believe in regular check-ins to ensure your plan aligns with your goals. This might include adjusting your investment portfolio or revisiting your level of insurance coverage. If your health changes, we can help you review how best to use your funds to maintain or improve your quality of life.
Starting sooner rather than later
Long-term care planning is easier when you start early. If you begin in your 50s or 60s, you can build a flexible plan that adapts as your needs develop. You have more time to spread costs and adjust investments. Even if you’re older, it’s not too late. Any forward-thinking strategy is better than none. The key point is to keep discussions open and ensure your loved ones know your intentions.
Peace of mind through preparation
Planning for your care needs can help you feel more in control. It may also reassure family members who want to see you well supported in later life. Setting aside time to understand your resources and explore different funding methods protects yourself and your loved ones from unplanned stress and costs. We’re here to offer clarity and guidance every step of the way.
If you’d like a more detailed discussion on how to plan for your long-term care, contact us today. We’re ready to provide advice that suits your life and your finances.
Contact us
We welcome the chance to discuss any aspect of your future care arrangements. Call us or visit our contact page to arrange a conversation with our advisers.
We’re committed to offering you guidance on your long-term care plans.
Let’s set up a meeting to see where you stand and how we can help.
Note:
- HMRC rules and government legislation concerning long term care is subject to change.
- Claiming upon a long term care insurance plan will require a qualifying event or condition.