People in the UK are underestimating the cost of care in later life by around £7bn each year.
The research comes from Scottish Widows’ independent think tank, the Centre for the Modern Family.
It found that, on average, adults in the UK estimate residential care in later life will cost £549 a week. The actual cost is an average of £866 a week for residential nursing care, resulting in a shortfall between expectations and reality of £317 a week.
One in four people admitted they have no idea how they would meet the cost of care in later life, for themselves or a close relative.
Only 15% of people are saving money each month to pay for their own care and almost half of those asked said they avoid thinking about the issue because it makes them feel stressed.
Half of UK adults say they will have to rely on a relative to help cover the costs of care.
This could put families in a difficult financial situation, especially as more than four in ten people have £2,000 or less in life savings to draw upon, which means they could only cover care costs for two-and-a-half weeks.
The Centre for the Modern Family also found that half of UK adults believe helping ageing parents pay for care is a responsibility that should be shared between siblings.
However, almost half of those aged 55 or over have not discussed who will take on this responsibility within their family.
With 92% of people not saving anything to help their parents or other elderly relatives with later life care costs, there could be a significant shortfall in support, especially as people estimate they could only afford to spend £69 a week on care for their parents.
Another potential issue could be a lack of understanding of how the benefits system works in later life.
Almost one in four people claim they would need, or expect, to rely entirely on state support, but two in five admit they don’t actually understand what benefits – both practical and financial – they would be entitled to receive.
Supporting relatives practically and financially also puts emotional strain on families.
Of those already providing care, four in five say it has had an effect on them, with more than a quarter admitting it has put a strain on their close relationships.
Although women are more likely to say they have less time to themselves than men when caring for a relative, men are more likely to feel their family relationships have been impacted than women.
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.”
Here at Informed Choice, we provide independent financial advice to make the most of your money in later life and ensure you can continue to afford care fees for as long as necessary.
