People in the UK are underestimating the cost of elderly care by £7bn every year, according to research from Scottish Widows’ independent think tank, the Centre for the Modern Family. On average, UK adults estimate that residential care would cost £549 a week – when in reality it costs on average £866 for a place in a nursing home – leaving a shortfall of £317 every week.
More worryingly, the deficit could be significantly higher in reality, since one in four (25 per cent) people admit they have no idea how they would cover these costs for themselves or a relative. Only 15 per cent of people are saving money on a monthly basis to pay for their own care when the time comes, and almost half (49 per cent) say they avoid thinking about the issue because it makes them feel stressed. With an ageing population and growing care costs, the nation could be facing a care funding crisis.
Families footing the bill
Instead, half (49 per cent) 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 four in ten (42 per cent) 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 (50 per cent) of UK adults believe the responsibility of helping parents to pay for care should be shared between siblings. However, almost half (48 per cent) of those over the age of 55 still haven’t discussed who will take on this responsibility in their family. With more than nine out of ten (92 per cent) people not saving anything to help their parents or other older relatives, this could lead to a significant shortfall in support, particularly as people estimate they could only afford to spend £69 a week on care for their parents.
A lack of understanding of the benefits system could also be problematic for many. Almost one in four people (24 per cent) claim they would need, or expect, to rely entirely on state support, but two in five (42 per cent) 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 (23 per cent) of those caring for a family member say it has put a strain on their finances. One in ten (12 per cent) have been forced to make sacrifices to cover the cost of care for themselves or a relative, with a quarter (24 per cent) of those people making major adjustments such as re-mortgaging their house. A similar proportion (22 per cent) have been forced to make a moderate sacrifice such as taking on a second job to cover the costs.
Supporting relatives practically and financially also puts emotional strain on families. Of those providing care, four in five (80 per cent) say it has had an effect on them, with more than a quarter (27 per cent) admitting it has put a strain on their close relationships. Although women are more likely to say they have less time to themselves (48 per cent) than men (34 per cent) when caring for a relative, men (30 per cent) are more likely to feel their family relationships have been impacted than women (23 per cent).
Jane Curtis, Chair of the Centre for the Modern Family and non-exec director of Lloyds Banking Group Insurance, 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. Providing clarity and raising awareness of what is and isn’t available is critical to helping people prepare for the longer-term future.”