Families are being urged to begin planning now for the potential costs of social care in later life, even as the new UK government explores reforms to the sector. Prime Minister Andy Burnham has instructed Baroness Casey to accelerate an independent review of adult social care, with proposals reportedly including higher taxes on workers or increased inheritance tax to fund a new national care service that would operate alongside the NHS.

Meanwhile, experts warn that individuals should not wait for political decisions before addressing their own social care arrangements. According to financial advisers, around one in seven individuals aged 65 and over may face lifetime care costs exceeding £100,000, with monthly nursing home fees often surpassing £5,000. Such expenses risk rapidly eroding personal wealth accumulated over a lifetime.

Lucie Spencer, a financial planning partner at Evelyn Partners and member of the Society of Later Life Advisers, highlights the complexity many families face in navigating care funding. She notes recent changes such as the introduction of inheritance tax on unused pension funds from April 2027 have complicated planning, as retirees previously used pension savings as a tax-efficient financial buffer against care costs.

One essential measure families should take is establishing lasting powers of attorney. Spencer explains there are two types: one covering health and welfare decisions, which only applies once a person loses capacity, and another covering financial affairs, which can be used while the person retains capacity but requires assistance managing their affairs. Without these arrangements, relatives may need to apply to the courts for deputyship, a lengthy and costly process.

Spencer also stresses that many mistakenly assume they will not qualify for council support due to owning a home or having savings. Local authority funding depends on both care needs and financial means. Individuals in England with assets exceeding £23,250 are generally expected to self-fund care, while those with assets between £14,250 and £23,250 may receive partial support. Qualifying for assistance requires first requesting a Care Needs Assessment. Whether a property counts as an asset varies by circumstance.

Residential care is not the only option, Spencer notes. Some individuals qualify for support at home, in assisted living, or through home adaptations funded by grants such as Disabled Facilities Grants. Attendance Allowance, a non-means-tested benefit, can help with care costs, although many eligible pensioners do not claim it. Families providing care might also be eligible for Carer’s Allowance.

For individuals with complex medical needs, an NHS Continuing Healthcare assessment should be requested. If a person’s primary need is health-related rather than social care, the NHS may cover 100% of the care costs without means testing, which can benefit those with severe dementia, complex nursing requirements, or significant medical conditions.

Spencer advises families to gather key financial documentation early, including pension statements, bank accounts, property deeds, and benefit records, to streamline assessments if care becomes necessary. She cautions against giving away assets to avoid care fees, as councils may regard such transfers as deliberate deprivation of assets and include them in financial assessments.

For those likely to fund care costs privately, professional financial advice is recommended, including consideration of immediate needs annuities, which guarantee payments to care providers for life and are exempt from income tax. Such products can help preserve an estate and enable individuals to remain in their preferred homes.

Overall, experts emphasize proactively understanding the current social care system and planning ahead, rather than waiting for government reforms, to protect both loved ones and financial assets.