UK Adults Not Planning Ahead For Future Care Costs
A growing proportion of UK pensioners may have no choice but to resort to their state pension income to cover the costs of their essential care. Fears are growing of a “concerning number” of over-60s who are looking into the idea of using their state pension to pay for their long-term care, or are already doing so.
The findings of a study published this week by Canada Life found that at least six million adults over the age of 60 would like to use their state pension to cover their care costs. This equates to approximately 30% of all UK adults aged 60 and over who said they would use their state pension income; just under £180 pounds per week to pay for their care.
This represents a 16% increase from last year, when the same question was asked by Canada Life to a sample group of the same size.
Care costs have become a major concern for millions of elderly people and their families, with average care facility costs now falling between £600 and £800 per week in the UK. This would subsequently mean that those counting on their state pensions would need to come up with an additional £400 to £600 weekly payment to supplement their retirement income and cover the costs of their care.
The report published by Canada Life suggested that poor financial planning and unpredictability are the primary causes of the growing deficit.
No Long-Term Care Plans
Canada Life’s study also suggests that a worrying proportion of over-60s have not planned financially for their long-term care needs. As many as 40% said they did not know how they would pay for long-term care, if and when it became necessary.
More over-60s than ever before are also turning to their cash savings to cover their care costs and as many as 35% saying they would use it to fund their essential care requirements.
More worryingly, 17% of UK adults said that they have made no plans whatsoever for such a stage in their life. In addition, 15% said they expect the government to cover the costs of their care requirements in later life.
Consequently, equity release has become a popular choice for elderly homeowners looking to generate significant sums of money, in order to fund their essential care.
Around 8% said in 2021 that they would release equity in their home to help cover the costs of their care; up significantly from the five per cent who said the same last year.
One-sixth of Britons (17%) say they have not considered this far ahead, and 15% expect the government to cover the price of their care needs.
According to the research, equity release is becoming a more popular method of paying for care.
In 2020, 8% of those over the age of 60 said they would transfer equity from their house to support care expenditures, up from 5% in 2020.
The data also show a greater awareness and comprehension of equity release and its applications; only 4% of respondents indicated they had no idea what equity release was.
The findings were discussed by Alice Watson, Head of Marketing, Insurance, and Canada Life.
“As a society, we are still grappling with the problem of long-term care and who pays for it,” said Alice Watson, head of marketing and insurance at Canada Life.