During the final few years of my extended graduate student lifestyle, I wondered if I’d ever spend money like a normal person.

House-sharing in my early 40s was still fun. I lived with an old friend – a should-be standup comic – and my picaresque romantic life was heavier on the romance than the ‘life’ part. So I never had to level up my spending on that account either.

My income was good if unspectacular by London standards. It dwarfed my needs.

I was lucky that my job provided global travel and a paid-up social life.

Combine a lifetime of saving with investing mania, and any rare splurge on a fancy meal or even a modest holiday felt like scrumping apples from an orchard.

I had growing resources at my back. But I had no desire to deploy them.

Spending money just seemed to create hassle, anyway. A new gadget to learn, or an expensive suit that needed adjusting, taking me back into the sight lines of salesmen.

I had a pet theory that the only sure way to get value from money was to either eat it via a favourite restaurant, or to take a black cab home afterwards. (This being before Uber or even Deliveroo).

Eating out and avoiding the night bus delivered the most bang for my hoarded bucks, not that I did much of either.

Everything else had catches.

What became of the likely lads

I appreciate that to some the notion of a nearly-middle-aged man living with his university friend and relishing a free-range chicken from Waitrose as a treat will seem odd. If not pathetic.

But it is not that strange in the mildly less conventional urban circles I moved in.

For a long time the unusual thing versus my peers was my portfolio, not my living arrangements.

However time did eventually tell. Generations of friends paired-up and left London. (And got divorced, but that’s another story.)

And as Morrissey once sang, the joke that me and my other half on the council tax bill were already a married couple wasn’t quite so funny anymore.

One acquaintance pitched our set-up as Men Behaving Badly meets the IT Crowd.

Another – an ex-girlfriend turned confidant – described me as chrysalis in suspended animation.

I mostly brushed this off, lying on our vast sofa watching The Wire on a Sunday night while they fretted with kids or dreaded work on Monday.

Indeed that sofa was a case in point. My housemate got it from his high-rolling sister. She couldn’t take it with her when she emigrated with her banker husband and kids to South East Asia. We got it ‘on loan’ but it was obvious she’d never want it back.

We marveled that it cost “over £1,000”. My friend almost bragged as much to visitors.

Strangely, they never seemed that amazed.

Soon enough I’d find out why.

Can’t stand me now

You see, the end was near for my long experiment in responsibility-free living.

One day I showed my pal a Help to Buy scheme and this time it grabbed his attention.

I suspect he was getting fed up with our take on The Two Ronnies, or at least becoming more sensitive to the innuendo.

Also, with my financial hat on I’d been boring him for a decade about how he should convert his dependable salary into a mortgage.

Finally he listened.

Six months later I was able to rue my advice at my leisure as I knocked about the house on my own. Having a place to myself did make a nice change. But I didn’t like the rent at all.

I decided to bite the bullet and to buy my own place, too.

My eccentric finances made this non-trivial. But I wangled a mortgage and bought a roomy space that four years on I’m still smitten with.

What a waster

Breaching my fortress balance sheet with a mortgage after a lifetime of no debt upset my equilibrium. I’m still adjusting my investing, for instance, to reflect my changed risk tolerance.

But it was spending money to make my flat into a home that presented the biggest challenge.

As I said, for many years I was fortunate to travel with work. Being in a somewhat trendy industry, we invariably stayed in hip boutique hotels.

I loved them and I wanted my own home to be as nice. I knew this would mean spending money.

But I didn’t. Not to begin with. Perhaps I couldn’t.

At first I slept on a camping mat. Snow piled up against the bi-fold doors.

I didn’t have any curtains.

My then-girlfriend got sick of this pretty quickly, so I bought a mattress. It arrived in a box and I slept like a dream.

Specifically, like someone dreaming of a dining table and perhaps a TV instead of a laptop.

I told myself and others that I was gathering my interior design thoughts. And it was true I now spent my weekends in the shops – places like Habitat and Heals and John Lewis that had previously been about as substantial to me as the facades of a Hollywood set.

The truth was I was reeling from the cost of moving – especially the obliteration of tens of thousands of pounds due to stamp duty – and I needed to regroup.

Don’t look back into the sun

It took a while. But in time I did furnish my place in the style I aspired to be accustomed to. I even splashed out on a wish list item – a coffee machine – that still makes me smile four years on.

Most people come to personal finance blogs to hear how to save and invest.

But from years of the Monevator comments, I know I’m not the only one with a not-spending habit.

So here’s how I learned to actually spend money without ruining my long-term plans.

1. Partition your finances

Unlike my co-blogger, I don’t budget. For most of my life a budget would have been as gripping as a celibate monk chronicling his sex life. I invest almost everything I can, and if I need to spend there’s money left in the current account.

I pay myself first, second, and third!

However I do track my net worth and my portfolio (and sub-portfolios) via a real-time spreadsheet.

So I created a new entry for flat furnishing. I detailed all the purchases I could think of, estimated the cost of each, and bumped the total up by 50% as a buffer.

This money was now separately bucketed for doing up my flat.

This got it into my skull that my spending would be contained. I could see my money mostly stayed invested. And because I was outfitting my first home as a 40-something after years of saving rather than straight from university, I was lucky in that the budget was only a small share of my net worth.

2. Spend money slowly

Unfortunately for you – unless you are one of half a dozen people I know who could be reading this – you haven’t been to the most beautiful home in the world.

But I have. I still have daydreams about it.

A relatively modest finca in Spain, it was refurbished and extended by the mother of another of my exes. (See, there are perks to serial heartbreak.)

Besides having an amazing eye for detail – and a bargain – she explained that the secret was to go slowly. To see how you use the space. How the light falls. And so on.

That was all a good excuse to spread out my spending and put up with short-term inconvenience while I decided what to buy for the best.

This gentle pace definitely made it easier to spend compared to bleeding cash every weekend.

3. Spend out of income (including future income)

Another benefit to drawing out my spending was I dipped into my savings less than I’d anticipated. It was more that I redirected new income towards each month’s project.

My saving rate slowed, of course. But that was pretty invisible, and easier for a lifetime saver than seeing my bank balance go south.

(To get a sense of just how deeply my saving habit runs, I once worked out that some of the deposit on my flat originally came from a teenage paper round.)

I also put a lot of spending on a 0% credit card. There was no interest to pay for a couple of years. I ran this into five-figures. That might seem irresponsible but – without wanting to sound like a dick – even four years ago it was only as much as a daily fluctuation in my portfolio.

Before the term was up, I transferred the balance to a new 0% card for a small fee.

Honestly – with inflation running at 7% I’m happy to kick repaying this into the long grass.

4. Amortize everything

I soon learned the reason our old £1,000 sofa didn’t faze anyone is that because even for a very big sofa, a grand is not especially indulgent.

I spent several times that on a leather one with a three-month lead time from an Italian factory.

Buying this sofa did give me pause. I wondered who I’d become. I was not actually running a boutique hotel, after all. This was spending on expenses, not an investment for income.

However it was a very well-made and timeless sofa. I estimated it would last me at least five years and very probably ten. A few years in, my guesstimate is looking good.

Buying a big TV for £700 – even in the Amazon sales – was similarly hard for a lifelong saver.

But spending £140 a year to own a great TV (assuming a five-year lifespan) was palatable.

Again, for most of you this is trivial stuff. For me it was a breakthrough.

5. Consider the Joneses…

I thought of other people and what they owned and spent far more during this period.

Thinking of how certain better-off friends had been through this spending cycle several times – they were onto their fourth home and at least their third sofa – made me appreciate it was normal.

I was still being sensible and frugal-minded, I told myself. I was only now getting to this, and I was mostly buying stuff that would last.

And I have no intention of moving again anytime soon.

Clearly this was a life-phase I had put off. The savings had been banked and compounded, but now it was time to spend.

6. …ignore the Kardashians

All that being said, I was careful whose example I looked to.

In your early years after leaving education, you and your mates are mostly in the same boat. But over time – definitely by your 30s – the divergences emerge.

Some of you are still trying to find your balance at the start of an egg-and-spoon race.

Others are halfway down the track and apparently competing in a different sport altogether.

So I was careful who I compared my spending against. For example I’m pleased a couple of my friends have made several million; I put them out of mind when furnishing my flat.

Obviously I also took no lessons from those who’d always lived well beyond their means.

7. In the long run we’re all dead

I have an old friend with a divergent life and location who I only see once every couple of years.

When we do meet up he never fails to remind me how a few years ago I said we’d probably only see each other another 20 times in our lives.

My friend was shocked by the maths. But I’m very future-orientated and think this way all the time.

Being forward-focused is why compound interest is my North Star, and Buffett’s Folly my downfall.

Everyone comes to understand their mortality sooner or later. Maybe it’s the death of a parent. Maybe it’s the Twitter thread I saw yesterday where someone else ran the numbers just as I do.

Thinking about how I’d waited 20 years to kit out my first home made it easier to get spending. But thinking how long I had left to enjoy it made me think – perhaps for the first time – about what I was really accumulating all this money for, beyond wanting to be financially free.

That’s a weighty subject for another day.

But life changes. Don’t put everything off forever.

Up the bracket

Nowadays I find it easier to spend money. Buying and furnishing my flat – helped by the tactics just detailed – seemed to break some kind of spell.

Today I’m more likely to buy something because I want it, rather than only when I need it.

I appreciate that I’m saying this from the privileged position of financial security. But I don’t feel any great shame about that.

I was fortunate to be born fairly smart and to good role models in a safe, capitalist country. But beyond that I’ve earned and saved every penny.

For many years I heard about friends’ swanky holidays, smiled at their new cars, and admired their shoes and handbags. All the time shopping myself for yellow-labelled food at the supermarket and bargain clothes at TK Maxx.

And guess what? I still enjoy a pot of marked-down pesto as much as I used to. I’m no spendthrift.

The difference is that today, if I really want to make some pasta and there are no bargains to hand, I’ve learned how to bite the bullet and just buy it.

Bon appetite!

Have you get on a mental tips or tricks to help with sensible spending? Please share them in the comments below.

What caught my eye this week.

They say you should never let a crisis go to waste. But in his Spring Statement Chancellor Rishi Sunak blew it with two crises at once.

Cutting fuel duty was a small, pointlessly populist move. Both the cost and consequences are pretty modest in the grand scheme of things.

But the message it sends is dire.

The cost of a cut

The AA reckons only half the fuel duty cut will be passed on to motorists. What’s left won’t make much difference to many households.

Maybe £100 a year saved on average for a one-car family.

The people and businesses who burn a lot of fuel driving will of course save more. But they are exactly the ones that the tax system should be nudging towards alternatives.

You might say the cost of living crisis is an emergency. Well let’s remember that only six months ago the UN dubbed the latest nightmare IPCC report on climate change ‘Code Red for Humanity’.

The scientific consensus is that burning fossil fuels is heating the planet. And while there’s more debate about the size and scale of the consequences, the precautionary principle should have us acting to reduce this warming at every turn.

The surging price of gas and oil is a perfect casus belli to put Britain on the kind of war footing required to remake us into a low-carbon economy.

That is ultimately what will best preserve our standard of living and prosperity.

Instead Sunak subsidises more fossil fuel burning to cheers from MPs.

Paying for Putin

I know a few Barry Blimps out there imagine themselves to be bold contrarians by refuting climate science.

Well whatever – because today even they have a glaring reason not to be encouraging the burning of more fossil fuels.

Obviously I’m talking about Russian’s war with Ukraine.

At the same time as taking unprecedented economic action against Putin’s kleptocracy, Europe is paying up to $1 billion a day for Russian fossil fuels.

This money props up the regime and the war. We’re not so much talking good cop / bad cop as a bad cop / whisk the prisoner away for a luxury weekend in Dubai cop.

This reliance should have been dialed back years ago. The second best time is now.

Unlike Europe, Britain gets little of its oil or gas directly from Russia. But it’s not nothing – about 3-5% of gas and 6-8% of crude oil. So our hands are not clean. Some of your pounds at the pump go to Putin.

Still, it’s little enough that we could credibly attempt to slash what we spend on Russian fossil fuels to zero, fast.

Take back control

Lopping even the maximum 5p fuel duty cut off a litre of petrol costing £1.65 represents about a 3% saving.

Would it have been so onerous to ask motorists to skip one trip out of 30, or to pursue some other fuel saving measure instead? I don’t think so.

Yes, the sums are relatively trivial. What matters more is the signal.

If we’re to tackle climate change without putting on the hair shirts some argue it’s already too late for, every decision must be the right one. A public gullible enough to vote for Brexit cannot be told this transition will be cost-less and painless. They will bridle at every new initiative.

Professional wrong-man Nigel Farage is already waiting in the wings with his next self-destructive campaign – a referendum to abandon our climate goals.

Farage might dream of the waters of the Straits of Dover rising. But anyone with kids – or a passing interest in the future of humanity – shouldn’t tolerate his bullshit twice.

I happen to agree that in the long-term – as Boris Johnson said recently – “green electricity isn’t just better for the environment, it’s better for your bank balance.”

But in the medium-term it will be a costly and disruptive transition. We need to take this seriously. The public must know there’s work to do and a bill to pay. As many as possible must buy into it.

To quote the UN Secretary-General again, the knee-jerk rush for alternative fossil fuels in response to the Russia-Ukraine war is “madness” that will derail our already-insufficient climate goals.

It’s no surprise to see a man with Johnson’s moral compass dash off to to Saudi Arabia to seek to replace one murderous autocrat with another.

But as a nation we must do better.

Where’s my tax cut?

Around this point somebody is typing a comment saying that living in my ivory tower – um, in a two-bed flat in a London suburb – I don’t get the pressure the average person faces due to inflation.

Never mind that I read and link every weekend to various articles about exactly these pressures.

I’ll just conclude by pointing out that the fuel duty cut isn’t even fair by that measure.

Many people don’t drive. So they won’t benefit directly from a fuel duty cut. But they’ll pay for it via taxes.

Many people can cut back on non-essential driving. They can’t cut back on, I don’t know, food. Yet they’ll pay for the fuel duty cut for motorists.

The fuel duty cut is a specific tax break for an activity that threatens our financial future due to climate change – and maybe even our corporal one given the worst-case scenario from Russia.

Fuel rationing via a national speed limit or driving curfews or surcharges would have been fairer.

Alternatively, the money spent on cutting fuel duty could have gone instead on free public transport.

Then again much of the country is less well-served than London by public transport – another problem to fix, not a reason to support fossil fuel subsidies – so perhaps Sunak could have just sent everyone a cheque for their share of the £2.4bn cost of his fuel duty cut?

That way we could each ease the pressure on our finances however we saw fit.

Have a great weekend.

[continue reading…]

This is part four in a series on how to plan and pay for the cost of social care in later life.

Part one covered the gulf between genuine care needs and State provision. 

Next part two untangled how the means test values your assets (including pension and property) and when it excludes them. 

Part three explained when you qualify for State funding and when you don’t.

Now we’ll help you estimate an average care home cost that can be used to stress-test your retirement plans.

When I retired, I didn’t know if my financial plan could withstand years of one of us living in a care home. I just crossed my fingers and hoped that we’d never need to find out.

Or perhaps we could sell our house if there was no other way?

In retrospect, that was no plan at all. And now I’ve dug into it, I’ve found the data does exist to formulate a plausible lifetime cost for social care. 

In this post, I’ll show you how to construct your own number. You can then model how your own retirement finances stack up against the hard realities of the UK social care system. 

I’ll focus on the cost of funding a care home because that’s the nightmare scenario that can suck your own home into the means-testing mix. 

But I’ll present care in the home data at the end, too.

Caveat corner – Any number we come up with will necessarily be a crude average. Obviously the future cost of social care for any individual is unknowable. But as ever, it’s better to be roughly right than precisely wrong. The number we can conjure is informed by the best data available, and the exercise itself sheds valuable light on some of the challenges you may face. Demystifying the social care financial threat has reduced my fear of this unknown, and left me better equipped to negotiate it, should it affect me or my loved ones. Note we’ll root our numbers in today’s prices. Even if the spectre of social care lies decades in your future, your assumptions must rest on how your financial plan deals with the system as it exists today.

How to calculate care home costs

Here’s the process:

• Take the average annual cost of a UK care home place
• Multiply by life expectancy once in a care home
• Up-weight by care home fee inflation 
• Customise by gender, age, type of care (nursing and dementia care both increase cost), and geographic area to account for the postcode lottery
  

The average annual care home cost is:

£34,944

That number comes courtesy of Which and Paying For Care.1 Their source is LaingBuisson’s Care Homes For Older People UK Market Report. 

The report is an annual snapshot of the care homes market produced by business intelligence firm LaingBuisson. The data is widely used in the social care sector, including by the UK Government. 

Note that £34,944 is far from a worst-case scenario. 

The ‘average’ worst-case scenario is dementia care in a south-west of England nursing home: £58,864.

That’s £4,000 more expensive than the same care in a south-east of England nursing home. 

The best case is the £28,392 cost of a care home in Northern Ireland – no nursing care or dementia care included.

Paying For Care enables you to customise costs by region and care type.  

Terminology tee-up – Care homes typically offer personal care. That’s a defined and regulated service that supports people with tasks such as washing, dressing, and going to the toilet. Nursing homes are registered to provide care that requires a nurse. Dementia care is another service again. In reality, this distinction by provision is not clear-cut. A single care home may provide all these services.

Add the self-funder premium

The care home industry’s worst-kept secret is that those paying from their own pocket (self-funders) are charged more for the same care, in the same homes, as state-funded residents.

That’s because local authorities – grappling with squeezed budgets – use their buying power to pay the care homes less than the market rate. 

The squeezed care homes then make up the shortfall by squeezing self-funders.  

Yes, it’s another hidden tax2 that props up social care so long as our politicians fail to fix the system. 

Back to the data. 

The £34,944 average annual care home cost combines state-funded and self-funded places. 

So we must add a self-funder premium – because few of us will qualify for local authority support until our assets have been rundown. 

How much is the self-funder premium? 

The premium is north of 40% according to the House Of Commons briefing paper: Social care: care home market – structure, issues, and cross-subsidisation.

The paper quotes an average premium of 43% from a LaingBuisson white paper and 41% as reported by The Competition and Markets Authority. 

I don’t know how exactly LaingBuisson’s £34,944 splits between state and self-funded residents. So we’ll assume fifty-fifty. 

The actual proportion of the self-funded care home population (in England) lies somewhere between 40% to 52%, depending on the source you look at.  

Multiplying the 40% self-funder premium by our 50% self-funded population assumption means LaingBuisson’s £34,944 care home cost should be about 20% higher than the State-funded figure. 

So we increase £34,944 by 16.67% to find our self-funded care home cost. 

£34,944 x 1.167 = £40,780, which is the self-funded average annual cost of a UK care home.

That’s 40% higher than the average state-funded UK care home cost of £29,117. 

If you choose a different figure from Paying For Care’s table then multiply by 1.167 to add the self-funder premium. 

Life expectancy in a care home

Now we multiply our £40,780 figure by the number of years we can expect to live in a care home. 

Life expectancy data comes from the Office of National Statistics (ONS) report Life expectancy in care homes, England and Wales: 2011 to 2012.3

Life expectancy for care home residents aged between 85 and 89 is:

• Four years for women
• Three years for men

I’ve chosen the 85 to 89 cohort because your chances of going into a care home are relatively low before you reach that age. (That’s according to the ONS report Changes in the Older Resident Care Home Population between 2001 and 2011.)

The table below details the proportion of the total population living in care homes (England and Wales) calculated by the ONS:

If you’re a man feeling a bit smug about the differential from age 85, don’t think it’s because you’re a tough guy. 

It’s most likely because a female carer has traditionally kept your sort out of care homes. Females don’t enjoy the same T.L.C., because men typically don’t last as long.  

(Or because men are too selfish – I see you at the back!)

Actually, female numbers in care homes declined 2001-2011, despite an aging population. The ONS thinks it’s because men are pulling their weight more as carers as the female/male life expectancy gap closes. 

There’s also some evidence that better health in later life – plus an increasing preference for care at home – could offset the rise in frailty that accompanies extended lifespans. 

Therefore, if you decide to tweak the life expectancy figures because you’re youthful – and so will likely live longer than previous generations – it’s reasonable to add a lower uplift than implied by your birthday. 

Care home cost inflation 

The £40,780 care home cost must also be multiplied by inflation for every year of life expectancy in care beyond the first. 

More realistically, we should multiply by an annual rate of care home price rises – which I’ll estimate at around 5%. 

My care home price inflation figure is partially derived from healthcare charity The King’s Fund. It estimated that the cost of care home places rose by 12% above inflation from 2015-16 to 2019-20.

That works out as approximately a 3% annual rate above inflation. Adding that figure to average UK consumer price inflation (CPI) of 2.5% gets us to 5.5%. 

But I round down to 5% annually in the hope that the political pressure to improve social care takes the steam out of costs eventually. Moreover, Monevator writer and finance industry insider, The Planalyst, tells me that care home inflation is around 5% annually in her experience. 

Paying For Care assumes an annual fee increase of 3%. So use that if you’re more optimistic than me. 

The cost of a care home: putting it all together

Let’s tally the bill:

• The average care home cost is £34,944. 
• £34,944 x 1.167 self-funder premium = £40,780
• Men: multiply that number by your three year life expectancy in a care home. 
• Women: multiply that number by your four year life expectancy in a care home. 
• Multiply every year after the first by an additional 1.05 to factor in 5% care home cost inflation. 

By my sums:

The total average care home cost for a man is £128,558. 

The total average care home cost for a woman is £175,765.

That might not seem so bad, but…

It could be worse

…depressingly, I’ve uncovered reasons to think I’ve under-cooked these numbers. 

Care homes often charge extra for services such as wi-fi, outings, transport, and carer support to attend dentist, GP, or hospital appointments. 

Please read this excellent report by Citizens Advice on hidden care home charges if you ever need to choose residential care.

The new social care cap won’t ride to the rescue

If you’re living in England, you might hope the lifetime cap of £86,000 will cut your losses. 

But many of us won’t live long enough to hit the cap. 

That’s because swathes of your social care spending is officially excluded from your £86,000 total. 

A year one £40,780 care home cost looks like a huge dent in your £86,000 at first glance.

But you only move £18,717 towards the target after deductions. 

Most egregiously, it’s not the amount you paid for the care home place that counts. It’s the amount your local authority would have paid for that place. If it was paying for it! Which it’s not.

Calculating social care cap progress

To estimate the local authority rate, multiply £40,780 by 0.714 to give £29,117.

That’s the the state-funded price for your care home place. 

(Remember, we’re assuming the average self-funded care home cost is 40% higher than its state-funded equivalent.)

Deduct another £10,400 for Daily Living Costs (DLCs). The government has stated that you’ll be responsible for this amount per year – before and after hitting the cap. 

(We covered the ‘logic’ of that in part one of the series.)

£29,117 minus £10,400 = £18,717 progress made towards the social care cap in your first year in a care home. 

Now multiply that figure by your life expectancy and inflation (I assume the state rate and DLCs increase by 3% a year). 

The total is your contribution towards the £86,000 cap by the time your ongoing concern with this life is a coin flip:

Men’s social care contribution after three years is £57,888 – £28,000 short of the cap. 

Women’s social care contribution after four years is £78,353 – £8,000 short of the cap. 

If you do qualify for partial state funding along the way then that expenditure doesn’t count towards your cap either. 

Thus while state funding sounds like a win, it could crush your disposable income after you’ve paid your care home costs, because it delays the point at which the cap comes into play. 

I’ve modelled how a modest retirement income fares against the cold comfort of the social care funding system. Stay tuned for that in the next post in this series.

How to estimate care at home costs

You can estimate care at home costs using the UK Homecare Association’s minimum price for homecare. 

The Association has set the minimum rate for professional homecare at £23.20 per hour. (The rate based on the living wage is £24.08 per hour.)

Multiply the hourly rate by common amounts of daily care at home.

For example:

• Two hours per day: £24.08 x 2 x 7 x 52 = £17,530 annually
• Four hours per day: £35,000 annually
• Live-in care 24/7: £210,363 annually

Note care at home agencies often charge for extras such as unsociable hours and cancellations. (The Which website has a good piece on the hidden charges.)

I haven’t found life expectancy data that specifically covers people receiving care at home. 

You could adapt this ONS report on Disability-Free Life Expectancy in England. 

The crude headline is women can expect to live 18.5 years with a disability later in life, while men can expect 15 years. 

The report is nuanced however. And there’s no evidence that its definition of a disability is a good proxy for requiring care at home. 

Personally, I’d use a 3% to 5% inflation rate in the absence of specific care at home data on this point. 

Care home cost impact assessment

Pitting this cost model against my own retirement finances was eye-opening. The remorseless logic of social care funding forces you to sell off assets before you get any help. 

State intervention began within two years. But this still left me with little leftover money to top up the bare bones care package.

I’ll go into the gory details in the next post.  

And do remember the only certain thing about the costs I’ve presented is that they will be wrong. 

Your actual care home costs will depend on:

• The care home you choose
• The care you need – which can change over time
• How long you need care
• The actual rate of social care inflation
• The generosity of State provision at the time

But most of all, I hope the number will be wrong because you and yours never need social care. 

Take it steady,

The Accumulator

Bonus appendix: social care funding – the diagram

This flowchart graphically simplifies the complexities of the social care system. I hope it helps you follow this series.

1. Paying For Care is a consumer-facing website funded by Just Group plc. Just Group is a financial services company focused on retirement income products such as annuities and equity release. [↩]
2. As discussed in Parliament. Key quote from Baroness Browning: “I still find it bizarre that we have this subsidy in residential care… whereby self-funders subsidise those for whom the local authority purchases care. There is never any discussion around this. We do not talk about how fair it is. There is no discussion about the fact that individuals who find they have to self-fund are not paying just their weekly fees, but are also subsidising the person in the next room, or possibly even more than one person. I really think it is time that we exposed how the funding system for care works. It is like having a secret tax that nobody knows about. I find that quite abhorrent.” [↩]
3. This report is based on 2011 census data. It’ll be interesting to see how it changes when the 2021 census numbers are crunched. [↩]