LV= has published a report today which shows as life expectancy in the UK increases, the number of people that will need to make use of formal long term care services will grow from 840,184 today to 1.1 million by 2025, an increase of 37%.
The Future of Long Term Care report reveals that, in line with a rise in the number of Brits needing long term care, LV= predicts the average cost of long term care per person will rise by £7000 to £33,000 in real terms per year by 2025, an increase of 27%. This puts the total cost of long term care for the elderly in the UK at £37.9 billion a year by 2025, compared to £21.8 billion now. Cost increases would be even higher if the effects of inflation were taken into account.
The report shows that 52% (438,336) of those in formal care in the UK receive it in their home (domiciliary care), while 48% (401,848) are cared for in a residential home. The split of those receiving residential and care at home is expected to remain consistent in the future.
For residential services in nursing and care homes, currently those with assets worth over £23,250 are not eligible for Government support. LV=’s new report shows the average wealth, including assets such as investments, savings, property after mortgage, of those over age 55 in the UK is just £32,500 indicating that under the current rules many would have to fund the entire cost of care themselves with no help from the state.
Although 24% of UK adults expect an elderly relative to need long term care in the future, one in four of these (7% of all adults) plan to look after their loved ones themselves to avoid paying for care.
46% of those expecting to fund care for others have not thought about how they will pay for it. Those that have say their savings (22%) and salary (19%) will be the main source of funding.
Nearly one in five (17%) UK adults believe they will have to fund the cost of their own long term care in the future. When asked how they would fund their own care if needed, nearly a quarter (23%) said they would use their property to pay for care, either through equity release, re-mortgaging or selling their home. 18% said they would use savings, and 16% would use their pension income.
One in seven (14%) said they would rely on the state to cover their care costs, and a worried 12% do not think they or their family would be able to afford any care and do not know how they will pay for it.
Vanessa Owen, LV= head of equity release, said: “The UK is facing an uncertain future on the funding of long term care. Low interest rates and living costs continually on the up, coupled with social care budgets being cut, creates a worrying financial backdrop for many, especially those in retirement.
“It is a real concern for people who have the burden of long term care costs approaching, as currently they could be faced with an open ended bill which makes it difficult to plan effectively to meet these costs.
“With our report highlighting that the cost of care looks set to increase by 27% in real terms by 2025, people need to make sure they have thought about the possibility of paying for care, either for themselves or loved ones, and how it would be funded.”