You’ve worked hard, saved consistently, paid your mortgage, and perhaps sacrificed holidays or luxuries for financial security, and then suddenly there’s the fear that all that could disappear.
Discover everything you need to know about what happens to your savings if you need care:
The idea of needing care can be a scary one, especially if you consider how you’ll fund it. It leads to people asking questions out of fear, such as “what happens to my savings?”, or “will they take all my money?”
The word “take” makes it sound aggressive, as though savings are seized. That isn’t how it works, but it’s still a question on a lot of people’s minds, and an understandable concern. You’ve worked hard, saved consistently, paid your mortgage, and perhaps sacrificed holidays or luxuries for financial security, and then suddenly there’s the fear that all that could disappear.
Your savings are not “taken”. Rather, they are assessed and potentially used to fund your care if needed. In today’s article, I will explain what actually happens to your savings after a financial assessment, if you go into care.
If savings are in your sole name, the full amount is included in the assessment.
For example, let’s say you have £60,000 in savings, a private pension, and a state pension. If care costs £2,500 per week, your income is used first, and your savings are used to cover the shortfall. Over time, your capital reduces.
Once it drops to the upper capital limit, which is currently around £23,250, the funding structure changes. Below this threshold, the council begins contributing.
When savings fall to the lower threshold, around £14,250, the council pays the bulk of care fees, although most of your income will still go toward the cost – except for a small personal expenses allowance.
This is where many couples become anxious, but do not need to be.
If you hold money in a joint account, it is generally assumed to be owned 50/50. So if a joint account holds £40,000, only £20,000 would normally be assessed as belonging to the person entering care. The other half remains the spouse’s.
This principle often provides reassurance, especially where one partner remains living independently at home.
This is where it’s important to be balanced – you will not lose everything overnight. You are allowed to retain the lower capital threshold, and a small weekly personal expenses allowance for items such as toiletries, clothes, and small personal items.
However, care is expensive. If you are paying £2,000 to £3,000 per week, savings can quickly reduce. That’s why forward planning matters.
Income is treated slightly differently from capital. If you move into residential care, your state pension, private pension, and rental income is all taken into account.
You are usually left with only a small weekly personal allowance, often around £25 to £30 per week. If you are married and receiving a private pension, part of that pension may be allocated to your spouse, depending on how it’s structured.
At Heritage Estate Planning, this is something we encourage clients to check carefully with a financial adviser.
If you are living alone and move permanently into care, the property is included in the financial assessment. However, it does not have to be sold immediately. There is usually a 12-week property disregard, and a deferred payment agreement may be available.
A deferred payment agreement works a little like a loan. The council pays care fees on your behalf, and the cost is recovered from the property when it is eventually sold.
Alternatively, your attorneys may choose to rent the property out, using the rental income towards care fees, and keeping the property rather than selling it immediately. Every situation is different.
If your income covers the cost of care, your savings remain untouched. They are not seized or automatically transferred anywhere.
Care simply has to be funded, and if income is sufficient, capital may remain intact. Similarly, if care is provided at home and you continue living there, the property itself is not counted. The structure of funding depends entirely on your circumstances.
Once your capital reduces to the lower threshold, the local authority becomes responsible for funding at their approved rate. This is where your choices can change.
If you were previously paying £3,000 per week in a premium care home, and the council’s rate is £1,500 per week, there are three possible outcomes:
This is often the most difficult part for families. It’s not just a question of finances, but it’s also about your stability, familiarity, and proximity to loved ones.
We can’t predict exactly what care any of us may need, but what we can do is plan for flexibility. That may involve building pension income early, diversifying investments, structuring property ownership carefully, or putting Lasting Power of Attorney in place.
Without a Lasting Power of Attorney, families may struggle to access accounts or make financial decisions at the point they’re most needed.
Planning isn’t about worrying if your savings are going to be taken, it’s crucial is maintaining control. Because the reality is that savings are not “taken”, they are assessed and if necessary, used to fund care.
The question isn’t “How do I stop my money being used?”, but rather, “How do I plan so that if it is used, I still have choice and dignity?”
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