05 Sep 2017
People in the UK are underestimating the cost of elderly care by £7billion every year.
This staggering figure comes after research from Scottish Widows’ independent think tank, the Centre for the Modern Family (CMF).
On average, UK adults estimate that residential care would cost £549 a week – when in reality it can cost on average £866 for a place in a nursing home – leaving a shortfall of £317 every week.
In Scotland, the cost of a care home with nursing per week is listed as being lower – £852 – but this is still only marginally below the UK average.
One in four people admit they have no idea how they would cover these costs for themselves or a relative.
Only 15% of people are saving money on a monthly basis to pay for their own care when the time comes, and almost half say they avoid thinking about the issue because it makes them feel stressed.
CMF said that, with an ageing population and growing care costs, the nation could be facing a care-funding crisis.
Nearly half of UK adults say they will have to rely on a relative to help them cover the costs.
This could leave families in a difficult financial situation, particularly as more than 42% of people have £2,000 or less in life savings to fall back on, meaning they could only cover the cost of care for a maximum of two-and-a-half weeks.
Half of UK adults believe the responsibility of helping parents to pay for care should be shared between siblings. However, 48% of those over the age of 55 still haven’t discussed who will take on this responsibility in their family.
CMF said a lack of understanding of the benefits system could also be problematic for many.
Almost one in four people claim they would need, or expect, to rely entirely on state support, but 42% admit they don’t actually understand what benefits – both practical and financial – they would be entitled to.
An over-reliance on relatives to provide financial support already has a significant impact on families. Almost one quarter of those caring for a family member say it has put a strain on their finances. One in 10 have been forced to make sacrifices to cover the cost of care for themselves or a relative, with a quarter of those people making 'major' adjustments such as remortgaging their house. A similar proportion have been forced to make a 'moderate' sacrifice such as taking on a second job to cover the costs.
Jane Curtis, chair of CMF, said: “The number of people in care in the UK will almost double by 2035. Our research shows that an over-reliance on relatives and the state could put families in serious financial difficulty. It can seem difficult to know how to prepare for the future, but to avoid a financial care crisis we all need to have an honest discussion on later life care as early as possible so no one is left footing a bill they can’t afford.
“As for state provision, it’s clear that many people simply don’t understand the social care benefits and support system."
As an independent financial adviser, Aberdein Considine can help you with later life plans for your future care needs.