Average ISA will buy 39 weeks of care, the average stay in a care home is 130 weeks
With the Government floating the idea of a new Care ISA that could be exempt from Inheritance Tax, the specialist financial services group has calculated the average ISA would only pay for 39 weeks residential care in the UK.
“ISAs have been a popular way for people to save tax-efficiently for nearly 20 years but even over that timescale the average holder has not built up enough to pay for even a single year of care,” said Stephen Lowe, group communications director at Just Group.
“With more than half (53%) of 45-54 year olds telling us they haven’t even thought about paying for care1, it’s difficult to imagine how a new Care ISA could suddenly spark the dramatic shift in savings that will be needed to meet these potentially huge residential care bills in the future.”
Just Group has created a regionalised map showing how many weeks of residential care the average Isa holder could potentially meet from current resources. For the UK the average ISA is worth £24,0352 which would pay for about 39 weeks care compared to the average stay of 2.5 years3 for those entering a residential home.
Using figures that reflect differing care costs in the regions3, the average ISA value in the North East is £19,915, enough to pay for only 35 weeks care. The North West has an average ISA size of £21,560 which could pay for 41 weeks care. In London, the average ISA value is among the highest at £25,982 but high care costs in the capital mean that the money would only last 36 weeks.
“ISAs will only scratch the surface of the problem of how to pay for care, compared to using the wealth tied up in property which is far larger and more widely spread,” said Stephen Lowe.
“Only about four in 10 of the adult population has an ISA, falling to three in 10 in Northern Ireland. Fewer than one in 20 estates are taxed on death so the appeal of a tax break is limited.
“While most people have relatively modest care costs, the biggest problem is the minority who end up needing care for many years but cannot hope to save the six-figure sums to pay for it themselves.
“Government proposals would be better focusing in the short-term on how to incentivise people aged 50+ to use some of the many trillions tied up in their properties to support their later life care costs and focus longerterm policy development on establishing solutions to pool risk so people can be protected from catastrophic care costs that destroy their life savings.”
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