The cost of care comes back to the age-old story of who pays for the elderly when they can no longer look after themselves.

As people live longer due to a better diet and improved healthcare, the basic misconception that underlies retirement is long term care is not free at the point of delivery like the National Health Service.

Long term care comes in two types -

• Nursing care to help individuals live in their homes longer or in a care home

• Health care for individuals who need continuing medical assistance

The first is a paid-for service and the second is free, like any other healthcare.

Paying for long term care is a matter of perception. Many over 55s perceive nursing care as a right and not as something they should pay for, so they fail to save and plan for the eventuality.

The type of care many receive is blurred as well as a mixture of nursing and health care.

The result is everyone else has to pay, but because the number of younger workers contributing tax and national insurance is falling and the number of over 55s is rising, the economy has an imbalance that needs to shift the burden of funding long term care to later life.

In many cases, today’s older generation are in denial, claiming they won’t pay or can’t pay for their care.

It’s unfair to make the younger generation pay – and by younger, it’s typically those approaching their own retirement who are spending their own savings on caring for their older relatives.

The solution is unclear. Composing another financial product designed to pay for the cost of care adds to the unfairness if the contributions are not compulsory.

After all, why should two workers stand beside each other, earn the same and toil as hard as each other, only for one to make a contribution to their long term care in later years while the other gets the same benefit for free?

The long-awaited Dilnot Report in to setting up fair and sustainable funding for long term care recommends far-reaching changes that alter the financial landscape for retirement savers.

One of the key points of the report is upping the means-tested threshold for assessing care needs from £23,750 to £100,000.

Criticised in some areas as a move that helps the wealthier hang on to more of their money, if the change is accepted by the government, the consequences for asset rich retirees are enormous.

The report also recommends an insurance-backed savings scheme for long-term care capped at every one paying £35,000. After the threshold is passed, the costs would be transferred to the state.

Dilnot reckons this would cost the government around £1.7 billion to implement, although the Treasury has done some number-crunching that comes up with a figure approaching double that estimate.

The report was tasked with recommending a shake-up to long term care funding by Prime Minister David Cameron last year. A committee chaired by economist Andrew Dilnot widely consulted before drafting their recommendations.

Andrew Dilnot said: “The issue of funding for adult social care has been ignored for too long. We should be celebrating the fact we are living longer and that younger people with disabilities are leading more independent lives than ever before. But instead we talk about the ‘burden of ageing’ and individuals are living in fear, worrying about meeting their care costs.

“The current system is confusing, unfair and unsustainable. People can’t protect themselves against the risk of very high care costs and risk losing all their assets, including their house. This problem will only get worse if left as it is, with the most vulnerable in our society being the ones to suffer.

“Under our proposed system everybody who gets free support from the state now will continue to do so and everybody else would be better off. Putting a limit on the maximum lifetime costs people may face will allow them to plan ahead for how they wish to meet these costs. By protecting a larger amount of people’s assets they need no longer fear losing everything.”

The report has won broad support from the government and Labour.

As you grow older, you face many problems, particularly on the health front. While you will live longer, probably well into you 80s, there’s really no guarantee that you will live well all these years. A lot of the elderly find themselves grappling with health issues that require constant care and nursing, best provided in a nursing or residential long-term care facility. To provide for these troubles of age as you grow older many people prefer planning now and purchasing long term care insurance.

Long term care insurance can be purchased immediately, meaning at the time when you would like to move into long term care, or in advance as a precaution for the future. These policies work like all other insurance policies. They pay out regular for care and assistance that you need, in return for a premium. The premium may be monthly or a single lumpsum. The coverage provided is varied and can be adjusted based on how much you need and how much premium you can afford.

Long term care insurance is a wise move if you’d rather not spend all of your savings and investments on your health and well-being. However, it can be a little expensive, and therefore you need to consult a financial advisor before going ahead with it. Before you choose a policy it is best to shop around and check what kind of health conditions and care are covered and what is not. With some homework and research making this decision should be easy and profitable.

Recent research shows that over the next 20 years, the cost of staying in a care home is likely to double *. Source: http://www.nsandi.com

It’s absolutely essential to get good advice, especially since the average fees for care homes with nursing care home are currently over £36,000 a year*. That’s £144,000 over four years – the average length of stay in a care home.

Naturally, thinking about going into care is quite an emotive issue for your and your loved ones. Specialist advisers can be invaluable in explaining your care options and how you can meet the costs most effectively, particularly if you want to remain financially independent and also want to leave a legacy.

Here is some information to think about if you have an immediate need for care, or if you’re planning for the future.

Most people find moving house a huge upheaval. But when that move is into a care home, these feelings are often compounded by the fact that you are also giving up some of your independence.

If after settling into new accommodation you find that you can’t afford to remain there, you may need to move to another care home, or even to a smaller room which can naturally be upsetting.

Taking specialist financial advice at the outset should help you avoid any distressing situations like this in the future.