Care home fees planning can be a difficult time. Moving into a care home can bring worries about independence and dignity. Adult children helping to arrange care may find themselves balancing practical decisions with feelings of guilt. Understanding the care sector can help you manage this stressful phase of life, whether it is for you, your spouse, your parents or another family member. This Q&A article looks at the options for funding care costs.
The funding rules below apply to England and were checked in October 2026. Different rules apply elsewhere in the UK.
How common is living in a care home?
According to the ONS, 2.5% of people aged 65 and over in England and Wales lived in care homes in 2021. Of those older residents, 56.4% were aged 85 or over. These figures give some context, but they cannot tell you your personal chance of needing care.
How long might care be needed?
Care needs and the length of a stay vary widely. ONS estimates for 2021 to 2022 measured remaining life expectancy among existing care-home residents, not the time a newly admitted resident would stay.
Naturally, the care someone needs and how long they need it will depend on their individual circumstances. When planning, I would look at the effect of both shorter and longer periods of care. An average cannot tell you when an individual’s care costs will end.
What will care cost?
The cost of care homes can vary significantly depending on the type of care, the location and the facilities available. Nursing care or more complex needs can increase the cost.
Rather than relying on a national average, I would start by asking suitable local homes for current written quotations. Check what is included, how fees can increase and whether extra support costs more. Those figures will give you a more useful starting point for your planning, with an allowance for future increases.
Key Factors Influencing Care Home Costs
Several factors affect care home costs:
- Location: Homes in high-cost living areas charge more.
- Type of Care: Nursing homes are more expensive than residential homes due to the level of medical care provided.
- Facilities and Amenities: Homes with more luxurious offerings tend to charge higher fees.
- Room Type: Private rooms are costlier than shared ones.
- Care Needs: Specialized care, like dementia care, typically increases costs.
- Payment Structure: Some homes have all-inclusive fees, while others charge extra for additional services.
Planning for Future Care Needs
You cannot know in advance exactly when care might be needed or what it will cost. Plan around your available income and savings, with room for uncertainty. Specialist care-fees annuities may be an option once care is needed, but they are not suitable for everyone.
Assessing Future Care Needs
Start by assessing the potential care needs that might arise. Consider factors like family health history, current health conditions, and preferences for future care. Understanding these aspects will help estimate the type of care needed, whether it’s in-home care, residential care, or nursing care, and the likely duration of such care.
Funding Care Costs
There are several ways to fund care home expenses:
- Private funds and care-fees annuities: Savings, investments and income can pay fees as they arise. An immediate-needs annuity exchanges a lump sum for regular payments towards care for life. Its price depends on health, age and the income required. You usually give up access to the capital. Check protection on early death and whether payments will keep pace with fees. Take specialist advice before buying.
- Local Authority Support: In England, for 2026/27, the upper capital limit for permanent care-home residents is £23,250 and the lower limit is £14,250. Capital that must be disregarded is excluded from the assessment. Below the lower limit, a person may still contribute from their income; care is not automatically free. Eligibility and the contribution depend on the relevant needs and financial assessments. Different rules apply elsewhere in the UK. See the government’s 2026/27 guidance for England.
- NHS Continuing Healthcare: People assessed as having a primary health need may qualify for care arranged and funded by the NHS. If you do not qualify, NHS-funded nursing care may still contribute towards registered nursing care in a nursing home. Ask for the relevant assessment.
- Deferred payment agreements: An eligible person may agree with their council to defer care-home charges, usually secured against property. The debt must be repaid, and interest and administration charges can apply. Equity release is a separate commercial arrangement requiring its own assessment and advice.
Financial Planning
It is important to incorporate potential care costs into your retirement planning. You may need to fund some or all of the costs yourself, while making sure a partner at home still has enough to live on. Here are several strategies to consider:
1. Savings and Investments: Building a robust savings and investment portfolio can provide the necessary funds when care is needed. You may need to fund this from a pot otherwise designated for general retirement living. You will also need to consider the lifestyle costs of any financial dependents who will continue to live at home and will need money to live on.
2. Property and other assets: Selling your home is not automatically necessary. In England, its value is generally disregarded if a qualifying partner remains there as their main home. Certain relatives also qualify, including those aged 60 or over, subject to the occupancy rules. Ask the council to confirm the disregard that applies before making property decisions.
3. Pension income: Work out the income available after tax and the amount needed by a partner who remains at home. Extra pension withdrawals can affect tax and future retirement security. Check the council’s income-assessment rules before deciding how much to withdraw.
Government support and benefits
Attendance Allowance may help eligible people who have reached State Pension age. New PIP claims are usually for people below State Pension age. Existing awards and care-home funding can affect what continues to be paid. Check your circumstances before including a benefit in your care budget.
Legal and Estate Planning
Ensure that all legal documents, such as wills and powers of attorney, are up-to-date. Setting up a Lasting Power of Attorney (LPA) for health and welfare is particularly important. This legal tool allows someone you trust to make decisions about your healthcare and personal welfare should you become unable to do so. Watch this video to understand more.
Understanding the nature of care home needs in the UK is essential for making informed decisions about long-term care. By assessing future needs, planning financially, and understanding legal and governmental frameworks, families can navigate the complexities of care with confidence, ensuring the quality of life and dignity in later years.
Photo by Claudia Love on Unsplash
