People in the UK are underestimating the cost of elderly care by £7bn every year, according to Scottish Widows’ independent thinktank, the Centre for the Modern Family.
On a weekly basis, people underestimated the weekly cost of residential care by more than £300, the research found.
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.”
One in four people said they had no idea how they would cover elderly care costs for themselves or for a relative.
Only 15% were saving money on a regular monthly basis to pay for their own care and 49% said they avoided thinking about the issue as it made them feel stressed.
Almost half (49%) said they would have to rely on a relative to help them pay for their costs with 42% having savings of just £2,000 or less to fall back on.
Half of those polled believed the responsibility of helping parents pay for care should be shared between siblings, however, under half (48%) of those over 55 had not discussed who would take on the responsibility.
More than nine in 10 (92%) were not saving to provide for their parents or other relatives. People estimated they could only spend £69 per week on their parents’ care.
Almost one in four (24%) said they would need, or expect to rely entirely, on state support but two in five (42%) said they did not know what benefits they would be entitled to.
Almost one quarter (23%) of those caring for a family member said it had put a strain on their finances. One in 10 (12%) had been forced to make sacrifices to cover the cost of care for themselves or a relative, with a quarter (24%) of those people making major adjustments such as re-mortgaging their house. A similar proportion (22%) had been forced to make a sacrifice such as taking on a second job to cover the costs.
Jane added: “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.”
To read the report, click here.