The Majority of people in the over 50s age group severely under estimate the cost of long-term care in older age, according to long term care funding specialist Partnership.
Recent research suggests that the majority of over-50s calculate the cost of long-term residential care to be less than £30,000 per year, while a third believed that care will cost less than £20,000 per year and 12% believe that care will cost less than £10,000 per year. However typical fees for many quality care homes can add up to a third more than this figure, with around £50,000 a year being nearer the mark.
Whilst being a long way out on the costs of residential care, people were closer to the mark when it came to their life expectancy. People were surprisingly accurate in their estimation of how long they are likely to live (into their 80s), how many people will go into care (roughly 40%) and optimistic in their estimation on how long for (approximately 5 years). The reality is 2 years on average but 4 years plus for self-funders and 1 in 10 will live for 8 years in care.
But most people surveyed were completely unaware of the different financial products available to help them with the cost of long-term care, although surprisingly 53% would sell their home to finance their care fees. Only 11% said they would contact their local authority for advice and information about funding the cost of care, while only 4% would contact a financial adviser and 3% would contact a care home. Many people did not have a clue where to go to find advice.
Partnership’s, Chris Horlick says, "With life expectancy on the rise one of the major problems this new government faces is how to fund long term care fees for the elderly. If people are not properly prepared for the cost of care they could run out of money and have to fall back on the state, or end up spending far more than they need to on care fees. In some cases people may have to change care home, which is extremely traumatic for the elderly.”
Partnership estimates that last year local authorities in England had to pay nearly £1 billion to cover the care costs of people who ran out of money and had to fall back on the state. Out of the 53,000 people who started paying their own residential care fees last year only 7000 secured proper financial advice.
"ong term care plans are specialist insurance plans which, in return for a one-off lump sum payment, pay a guaranteed income for life which is tax free if paid directly to the care provider.