19 October 2017
UK adults on average under estimate the costs of residential care by as much as 57% a week, potentially building up a huge shortfall.
On average people estimate residential care would cost £549 a week – when in reality it costs £866 for a place in a nursing home – leaving a shortfall of £317 every week. According to research from Scottish Widows’ think tank, the Centre for Modern Family, this results in people under estimating the UK’s total cost of care by £7bn every year.
The research suggested this number can be even higher, since a quarter of the respondents 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. And 49% say they avoid thinking about the issue because it makes them feel stressed.
The solution for half of the respondents will be relying on a relative to help cover the costs.
The research also showed that half of UK adults believe responsibility of helping parents to pay for care should be shared between siblings.
However, almost half of those over the age of 55 still have not discussed who will take on this responsibility in their family.
According to Jane Curtis, Chair of the Centre for the Modern Family and Non-Executive Director of Lloyds Banking Group Insurance, the number of people in care in the UK will almost double by 2035.
She said, “Our research shows that an over-reliance on relatives and the State could put families in serious financial difficulty.” To be able to avoid a financial care crisis, families need to have an “honest discussion on later life care as early as possible, so no one is left footing a bill they cannot afford,” she noted.
The survey also showed a lack of understanding of the benefits system.
Almost one in four people claim they would need, or expect, to rely entirely on State support. However, two in five admit they do not actually understand what benefits – both practical and financial – they would be entitled to.
Ms Curtis said, “It is clear that many people simply do not understand the social care benefits and support system…Providing clarity and raising awareness of what is and is not available is critical to helping people prepare for the longer-term future.”
Last March, the Government pledged more cash for social funding.
In his first – and final – Spring Budget, Chancellor Philip Hammond announced additional grant funding of £2bn will be given to social care in England over the next three years.
The article you have just read is taken from the FT Adviser.
You can read the full Cost of Care Report here.