It’s a deeply personal matter, often accompanied by worries about finances, independence and family dynamics.
More than 5 million people in the UK need some form of care support according to Age UK. Of this group, around 3.4 million who need care support don’t receive any.
In this context, it is more important than ever to consider your need for later life care and how you might prepare for eventualities, such as paying for care. This is the most important step you can take today. It is possible to ensure your finances are prepared for such a life event in order to preserve as much as possible.
By taking practical steps now, you can ease the stress associated with the process and ensure your wishes are respected.
Below, we outline seven key areas to focus on, each designed to help you and your family prepare financially for later life care.
Ensure your finances are in good order
The first step is to gain a clear picture of your financial situation. This can feel daunting, but it’s a vital foundation for planning.
Start by listing your income, savings, investments, and any property you own. Include pensions, both private and workplace, as well as any other assets such as investments. Next, note your regular expenses, such as bills, groceries and insurance.
This exercise helps you understand what resources you have and what might be available to cover care costs.
If you’re unsure where to begin, consider gathering bank statements, pension documents and investment records. You might also want to check for any forgotten accounts or policies, as these could add to your resources.
It’s worth reviewing your spending and savings habits too, as small adjustments now could free up funds for future care.
If managing this feels too much, don’t hesitate to seek help from a trusted family member or professional financial planner. A planner can help you look at the ‘big picture’ with your finances and how you might better prepare for the eventuality.
Check for entitlements such as benefits or State Pension
Many people are unaware of the financial support they may be entitled to, which can make a significant difference.
In the UK, the State Pension is a key source of dependable income for many retirees, especially in later years, so confirm your eligibility and the amount you’ll receive. You can request a State Pension forecast online through the GOV.UK website.
If you’ve not paid enough National Insurance contributions, you might be able to make voluntary payments to boost your pension.
Beyond the State Pension, other benefits can be an important financial aid. Attendance Allowance, for example, supports people over State Pension age (currently 67) who need help with daily tasks due to illness or disability. In Scotland, this is now called the Pension Age Disability Allowance.
This benefit is not means-tested and can provide up to £110.40 per week (as of 2025). Other benefits, such as Council Tax Reduction or Winter Fuel Payment, may also apply and can help with the cost of living.
It might seem strange to discuss benefits such as these, but the reality is that many who need later life care face difficult financial choices about how to get help. The Government provides these as a safety net that aren’t means-tested for precisely this reason.
Talk to your family about your potential needs
Discussing later life care with family is often one of the hardest steps, as it involves confronting vulnerabilities. Yet, these conversations can bring clarity to a situation, ensuring everyone understands your wishes.
Start by choosing a calm, private setting and approach the topic gently, perhaps by sharing your concerns or asking for their input. Explain what matters most to you, whether it’s staying at home, moving to a care facility, or maintaining your independence for as long as possible.
Be open about the financial side, too. Share what resources you have and any gaps you’re worried about. Your family may have ideas or be able to contribute, whether through practical support or financial help.
If you have a will or lasting power of attorney (LPA) in place, let them know, as this can avoid confusion later. If you don’t, it is essential to considering putting both in place.
These discussions can be emotional, so take your time and revisit them as needed. The goal is to build a shared understanding, easing the strain for everyone.
Check if you qualify for funding depending on the condition
Depending on your health, you may be eligible for specific funding to help cover care costs. In the UK, the NHS provides support for those with significant health needs through NHS Continuing Healthcare.
This funding covers the full cost of care for people with complex medical conditions, but it is not a solution for all ailments that might mean you need care.
To qualify, your primary need must be health-related, not social care. The assessment process is thorough, so it’s worth seeking advice from your GP or a social worker to understand your eligibility.
If you don’t qualify for Continuing Healthcare, you might still receive NHS-funded nursing care, which contributes to nursing costs in a care home. Local authorities may also offer funding for social care, but this is means-tested and depends on your financial situation.
Contact your local council to discuss your needs and request an assessment. These options can feel like a maze, but knowing what’s available can make a real difference to your planning.
If you need local authority funding for care, you’ll undergo a financial assessment to determine how much you’ll contribute. This process looks at your income, savings, and assets, so it’s wise to prepare in advance. Below are key areas to understand.
1. Homeowner exemption
If you own your home, you may worry that it will need to be sold to pay for care. In some cases, your property is exempt from the assessment. For example, if your spouse, partner, a dependent child under the age of 18 or a disabled relative over 60 lives in the house, it won’t be counted.
The rules and stances vary widely by council, making this part of the process potentially quite complex. For further information, Age UK has a detailed guide.
2. Pension assessment
Your pensions, including the State Pension and private schemes, will be considered in the assessment. Some income, like a portion of your pension, may be disregarded if you have a partner who remains at home. Be ready to provide pension statements to clarify your income.
3. Warning about giving away assets
You might be tempted to give away money or property to reduce your assessable assets, but this can backfire. Local authorities can treat such actions as ‘deprivation of assets’ if they believe you did so to avoid care costs.
This could mean you’re still assessed as if you owned those assets. It is essential to seek the assistance of a financial planner before making any transfers to ensure you’re acting within the rules.
Whether you have insurance that could pay for care
It’s worth checking if you have insurance policies that could help with care costs. Some life insurance or critical illness policies include provisions for long-term care, though these are not that widespread in the UK.
If you have a private pension, you might be able to draw down funds flexibly to cover costs, but this requires careful planning to avoid tax pitfalls and running out of money.
Currently, there are no mainstream insurance products for covering long-term care.
The closest thing to long-term care insurance is the immediate care plan or immediate needs annuity, which can be set up to rise with costs and inflation.
Be sure to discuss your options with a financial planner to weigh the benefits against the cost.
How a financial planner helps ensure your plan works
A financial planner specialising in later life care can offer invaluable support, particularly when emotions run high. They can review your finances, identify gaps and suggest ways to maximise your resources to prepare for all possible outcomes.
They’ll take the time to understand your wishes and tailor a plan that aligns with your needs and goals.
Planning ahead with their help ensures you’re ready for whatever lies ahead, allowing you to focus on what matters most.
This guide is a starting point and every person’s situation is unique. Take things one step at a time, lean on support when you need it and know that preparing now can bring comfort to you and your loved ones.
