Budgeting for Later Life Care – The Expats Guide
Later life care is important to factor
into your retirement planning, whether you’d like to guarantee first-class
support for your relatives or ensure your retirement needs will be taken care
of.
In many cases, care costs are
forgotten in retirement planning, with potentially grave consequences, the
ideal being that you’d never need to use your contingency budget. With average
nursing home fees in the UK reaching just under £1,000 per month and up to
£2,400 a week for the most sought after private facilities, it’s an important
consideration.
Those costs may look very different in
an overseas country, or there may be no state provision at all, making the need
to prepare even more vital for British expatriates. Exceptional home care,
custom support and private medical treatment could increase that budget many
times over.
Let’s look at some options to consider
including in your latter life strategy and some factors that will help support
your long term financial security.
Average Later Life Care Costs
Whatever your age, when you look at
investment plans or financial approaches, the aim is always to provide the best
quality of life for yourself and your loved ones.
Many expats face a challenge when
appointing trusted, high-quality carers to look after their elderly relatives.
The complications of cross border transactions may add to the strain of what is
often an emotionally difficult time. It is wise to research the anticipated
costs of your own care to ensure you’ve budgeted appropriately to secure the
living standards and lifestyle you aspire to in later life.
How to Calculate a Later Life Budget?
A lot depends on your location, but as
a rough idea, we’ve collated the average costs of medium-level care facilities
in some of the most popular expat destinations:
·
Spanish care
facilities cost between £1,500 and £1,900 a month
·
Residential care
in Portugal comes in at £2,200 to £4,400 per month.
·
Canadian
residential care costs range from £862 to £2,670 a month.
Specific costs depend on the area, and
accommodation quality, but over, say ten years, primary level care in these
three countries is at least £15,000 to £44,000, ignoring any other outgoings,
expenses or living costs.
Note that there isn’t any reciprocal
agreement between the UK and other countries, so you’ll need to cover the costs
independently if you need support abroad.
The Value of Power of Attorney
We’ll come onto potential ways to invest
for your future care, but one crucial step is to think about Lasting Power of
Attorney (LPA).
Having a designated attorney, usually
a trusted family member, protects your interests and ensures that you have
control over who makes decisions about your care or finances if you are unable
to do so. LPAs must be registered when you have the appropriate capacity, so
it’s well worth doing now, rather than waiting until a crisis.
It’s also important to ensure your
Will is legally valid and up to date, making life easier for family members to
respect your wishes and ensure your estate is distributed as you require. This
process becomes more involved for expats, since dual Wills, in the UK and your
host country are typical – but any inconsistencies can cause considerable
delays and conflict.
Please get in touch with Chase
Buchanan at any time to discuss the best strategies for creating an LPA
agreement or download our complimentary Retirement
Planning Guide for further information.
Strategies for Later Life Care Budgeting
Life doesn’t always work out equally,
so there’s no telling whether one person may need years of quality care, and
another might remain healthy and active so it’s important to ensure you aren’t
left dependent on state care facilities or struggling to maintain your health
in the retirement years you should enjoy.
Fortunately, there are many ways to
incorporate a later life care budget into your plans, alongside other tasks
such as succession planning, let’s look at a few of the typical options:
Annuity Products
A fixed annuity pays out a static
monthly value, and while they aren’t insured, they are generally safe
investments but there are some caveats:
·
Some annuity
products earn little or even no interest.
·
Guaranteed income
may not keep pace with inflation.
·
Depending on the
annuity type, it may not provide a death benefit to your recipients.
·
As an expat, tax
relief regulations may mean that the benefits of an annuity are far better
replaced with an investment option suited to an overseas resident.
If you’re considering buying an
annuity, you must seek independent advice to ensure the product is suitable for
your needs and offers competitive returns, particularly if you move abroad
before starting to take pension income.
Guaranteed Income Investments
Guaranteed investment bonds can be an
option, with fixed interest payments made periodically, so you know what to
expect. Secured interest rates are agreed in advance and it can be a valuable
investment opportunity.
There are countless investment options
available, and it’s essential you select a fund that facilitates payments to
and from your home country without attracting tax liabilities.
Defined Benefit Pensions
If you are fortunate enough to have a
defined benefit pension, it is critical you seek guidance before transferring
that pension overseas. The security of pension income each month might be more
advantageous than another investment, so you should only consider a change if
you have certainty of beneficial returns.
Read more about international pension
transfers in our SIPPs vs ROPS Guide.
Investing for Later Life Care
As we’ve shown, these common solutions
are far from a one-size-fits-all resolution.
Some may be more relevant depending on
your residency status, financial liquidity, wealth management strategy and
investment portfolio, but in all cases, a consultation with the Chase Buchanan
team is highly advisable.
Our consultants provide:
·
Forecasting
scenarios, help evaluating your income, assets, and expenditure to calculate
any potential shortfall and the required returns.
·
Investment
recommendations to ensure your portfolio is geared to an acceptable risk level
and expected to provide requisite income to cover any shortfall identified.
·
Advice on property
assets and the options to use those assets to supplement your income or capital
wealth, whether your property is in the UK or overseas.
·
Taxation
guidance, working through strategies to safeguard your wealth for the next
generation, and protect your estate from unnecessary inheritance taxes.
Please get in touch with
the experienced team at Chase Buchanan for more information about we will
arrange a convenient time to discuss and get you on the path to making sound
decisions for the long term.
Original Source: - https://chasebuchanan.com/later-life-care-expats-guide/
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