- Over a third (35%) would use cash savings and one fifth (19%) would use their private pension to cover care costs
- Equity release is becoming an increasingly popular option, with 8% considering it to pay for care
- Two fifths of over-60s don’t know or haven’t planned how they will pay for care
Almost two-fifths (37%) of UK adults over the age of 60 say they would use the state pension of just £179.60 per week to contribute towards the costs of care, research1 from Canada Life reveals today. This is an increase of 16% compared to when Canada Life asked the same question last year and takes the total to 6.3million people.
With the average cost of a care home estimated at between £600 and £800 per week2, the 6.3 million over-60s will need to find an additional £400-£600 a week to afford care. This funding gap is underpinned by a lack of planning and uncertainty as two fifths (40%) of over-60s don’t know or haven’t planned how they will pay for their care needs in later life.
Over-60s are also looking to cash savings to pay for care, with 35% of over-60s saying they would use that as a source of funding, an increase of 20% compared to 2020, while one fifth (19%) say they would use their private pension, an increase of 11% compared to last year. As many as one in six (17%) Brits say they haven’t thought this far ahead, and 15% expect the government to cover the costs of their care needs.
Equity release is becoming an increasingly popular route for those nearing and in retirement to pay for care, with 8% of over-60s saying they would release equity from their home to cover care costs, up from 5% in 2020. The findings also reveal an increased awareness and understanding of equity release and its uses; just 4% said they were unaware of what equity release is.
Alice Watson, Head of Marketing, Insurance, Canada Life said: “As a society we continue to grapple with the issue of long-term care and who pays for it. Recent rumours suggested the Government is looking to increase national insurance to help fund the NHS and also pay for social care, but there is no doubt there is a big funding gap. These findings indicate that the over-60s have thought more about their long-term care needs in the last year, perhaps in part due to the pandemic. However, there are still a worrying number of people who haven’t and think their state pension will be enough to foot the bill.
“We must continue to encourage people to think about their wants and needs at the different stages of retirement and have these conversations early on, no matter how daunting they may be. Not only is it important to discuss plans with family members, but speaking to an adviser is a sensible first step. These professionals can help highlight how different financial products can be used to meet the needs of an ageing population, whether that be through their property, pension, or a blend of the two.”
- Source: Research among 2,000 UK adults conducted by Opinium between 9-13 July 2021 of which 642 were over 60
- Age UK - https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/
- Figure calculated using ONS UK population statistics