37% of adults in the UK over the age of 60 say they would use the state pension of £179.60 per week to contribute towards the costs of care, according to new research from Canada Life.
This is an increase of 16% compared to when Canada Life asked the same question last year and takes the total to 6.3 million people.
Canada Life says that with the average cost of a care home estimated at between £600 and £800 per week, 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 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 19% say they would use their private pension, an increase of 11% compared to last year. 17% of adults in the UK say they haven’t thought this far ahead, and 15% expect the government to cover the costs of their care needs.
8% of over-60s say 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 at 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.”
