Two thirds (68%) of people underestimate real cost of elderly care
Average individual care bill totals over £360,000 for ten years, but consumers believe it is £283,000, leaving a potential shortfall of £77,000****
Three quarters (76%) of millennials expect their parents to foot their own care bill, but almost a third (30%) of over 55s don’t know how they are going to pay for it
One in five (19%) Brits plan to sell their home to finance their care
Caring for one parent for six years costs the same as raising a child to 21
Uswitch.com is urging families to start the conversation now and plan for how they will pay for the care that may be needed.
The shocking scale of the UK’s looming care crisis has been revealed by Uswitch.com the price comparison and switching service. With research showing that consumers are underestimating the cost of ten years of elderly care by £77,300 per person.
Consumers estimate the average cost of residential elderly care for one person to be £28,358 per year. However, the Uswitch.com analysis shows the cost is now £36,088, a difference of almost £8,000 a year. This also means that the cost of looking after one ageing parent for a year far exceeds the average annual UK salary, currently estimated at £27,271.
The scale of the problem is so large that just six years of care for one parent now costs the same as the average cost of raising a child for 21 years – including any university fees.
Despite this financially crippling issue looming on the horizon, the research also reveals that families are simply not talking about elderly care. In fact, eight in ten families have never discussed paying for care and only 12% of over 55s have discussed their own care costs with their children.
People also have differing views on who is going to pay for the care. Three quarters (76%) of millennials expect that their parents will foot the bill, but a third (30%) of those over 55 are unsure about how they are going to afford to pay for their care. Nearly half (44%) of millennials haven’t even thought about caring financially for their parents.
Overall, Uswitch.com found that less than one in ten (8%) people feel prepared for the cost of their parents’ elderly care and one in four (25%) are concerned about being responsible for it. A further quarter (23%) are burying their heads in the sand and don’t want to even think about the financial challenge ahead.
The scale of the UK’s elderly care crisis is magnified as Brits are not saving for the future. On average, UK consumers only manage to save £126 a month, with a quarter (28%) admitting they save nothing. With this in mind, it is not surprising that almost one in five (19%) homeowners say they will sell it to finance their care, rising to nearly a quarter (22%) among the over 55s.
Uswitch.com is calling on families to start discussing any potential elderly care needs now to help prevent this looming financial crisis before it is too late to do anything about it.
Tom Lyon, money expert at Uswitch.com, says: “These findings show how unprepared we are when it comes to funding the care for our elderly parents. It is a sobering thought that it could now cost more to look after an elderly parent than to raise a child, adding extra pressure on families when household budgets are already squeezed.
“Families who do not have their affairs in order and are unable to access Government support could be facing a future of crippling debt. With this in mind, it is never too soon to start talking about the cost of care. The sooner you start the conversation, the sooner you can start planning for it.”
Find out how you could save over £1,000 a year with Uswitch here.
All research referred to was conducted by Opinium, July 2017 among 2,006 nationally representative UK adults (aged 18+).
When asked, ‘Approximately how much do you think it costs for 1 year at an elderly care home?’, a total of 68% of respondents selected figures £35,001 and under (6% selected ‘Under £10,000’, 13% selected £10,001 - £15,000’, 14% selected £15,001 - £20,000’, 12% selected £20,001-£25,000’, 14% selected £25,001-£30,000’, 9% selected £30,001 - £35,000). Therefore 68% of respondents selected figures £35,001 and under)
Calculation based on weekly average cost of all care homes in the UK being £694, according to Knight Frank 2016 Care Homes Trading Performance Review. Annual cost is therefore £36,088 and multiplying by ten means that ten years’ care will cost £360,880. When asked, ‘Approximately how much do you think it costs for 1 year at an elderly care home?’, the average estimation was £28,358. Calculated because 6% selected ‘Under £10,000’, 13% selected ‘£10,001-£15,000’, 14% selected ‘£15,001-£20,000’, 12% selected ‘£20,001-£25,000’, 14% selected ‘£25,001-£30,000’, 9% selected ‘£30,001-£35,000’, 8% selected ‘£35,001- £40,000’, 4% selected ‘£40,001-£45,000’, 6% selected £45,001-£50,000’, 12% selected ‘Over £50,000’. The mean of these results was £28,358. Multiplying by ten equals £283,580. £360,880 minus £283,580 equals £77,300.
When asked, ‘How are, did or do you think your parent(s) will, pay for their elderly care?’, 76% of respondents aged 18-34 years had a net response that their ‘Parents’ would cover the costs.
When asked, ‘How are you planning to pay for your own elderly care costs?’ 45% of respondents aged 35-54 years selected “I do not know”. 30% of those aged 55+ answered “I do not know”
When asked, ‘How are you planning to pay for your own elderly care costs?’ 19% of respondents selected “The sale of my house(s)”
According to research commissioned by insurer LV= in 2016, the typical parent can expect to spend £231,843 raising a child born in 2016 to the age of 21. £231,843 divided by £36,088 = 6.42.
According to ONS 2016 figures, the average UK salary is £27,271
When asked, ‘Have you and your parent(s) ever discussed the financing of the care they could, did, or do need?’ 80% selected “no”. When asked, ‘Have you spoken to your children about how the cost of your own potential care needs will be met?’, 12% of respondents aged 55+ selected “Yes, I have raised this with my children”
When asked, ‘Do you plan to, are you currently or have you already helped to care for your parent(s)?’, 24% of 18-34 year old respondents selected ‘No’ and 44% of respondents selected ‘Don’t know – I have not thought about this’. In total, this means 68% of 18-34 year old respondents say they haven’t thought about how they will or do not plan to care for their parents. When asked, ‘Approximately how much do you think it costs for 1 year at an elderly care home?’, a total of 58% of respondents aged 18-34 years old selected a figure of £25,000 and under: Calculated because 9% selected ‘Under £10,000’, 19% selected ‘£10,001-£15,000’, 18% selected ‘£15,001-£20,000’, 12% selected ‘£20,001-£25,000’. Therefore 58% of respondent aged 18-34 years old selected a figure of £25,000 and under.
When asked, ‘Which of the following best describes how you feel, felt or will potentially feel about being responsible for yourparent(s) care?’ 8% of respondents selected “prepared”. 25% of respondents selected “concerned”
When asked the same question, 23% of respondents selected “None of the above – I am not thinking about this yet”
When asked ‘Approximately, how much do you put into savings each month? Please include any savings accounts, ISAs and any money put into a private or workplace pension’ the mean result was £126. Calculated because 17% selected ‘Up to £50’, 13% selected ‘£51-£100’, 12% selected ‘£101-£200’, 6% selected £201-£300’, 4% selected ‘£301-£400’, 4% selected ‘£401-£500’, 6% selected ‘Over £500’. The mean of these results is £126. 28% of respondents selected “Nothing – I don’t save any money”
When asked, ‘’How are you planning to pay for your own elderly carecosts?’ 19% of respondents selected “The sale of my house(s)”. 22% of respondents aged 55+ answered “The sale of my house(s)”
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