As many as three in five over 45s underestimate how much later life care will cost them in the future, new figures claim.
Some 60 per cent think a year’s stay in a residential care home will set them back less than £60,000.
But the average care home cost for self-funders now stands at £66,456 per year on average, according to Just Group.
This means care costs currently stand at around £1,278 per week. For nursing care, however, the figure will be higher, and prices can vary wildly depending on the area.
The asset threshold for council care funding has been frozen at £23,250 since 2015, meaning that anyone with capital above this value is required to pay for their own care.
Some 85% of people who have held another find care were shocked at the cost, Just Group said
Those with assets over £14,250 but under the higher limit are given support, but must pay £1 per week for every £250 of capital above the lower limit.
With £15,000 in capital, for example, you would pay £3 per week in tariff income.
This means the number of self-funders has grown as the threshold’s value has eroded due to inflation.
Yet most people aren’t aware of just how much later life care could eat into the value of their estates.
In fact, more than a quarter of these over-45s, 28 per cent, underestimated the true cost of later life care by more than half.
A third of people, 31 per cent expected the cost of a year’s care to be up to £30,000 per year, though some 32 per cent expected the cost to be more than £70,000 per year.
Stephen Lowe, group communications director at Just, said: ‘Year after year, our care report shows people are unprepared for the true cost of care and those who do have experience of the system are left shocked at the level of fees when they come to help loved ones find a residential home.
‘With an estimated four in five people aged 65+ likely to require some level of care before they die3, millions of families are sleepwalking towards a nasty shock.’
Some 85 per cent of people who have held another find care were shocked at the cost, Just Group said.
Lowe added: ‘With the recommendations of the newly established Casey Commission on care funding years away, the Government has a responsibility to make clear what the current rules are and ensure people understand their financial responsibilities for later-life care.
‘Too often people are left grappling with unexpected and large financial costs at a time of crisis.
‘Our view is that the Government must support people dealing with the system as it is now, not how it might be in the future, by clarifying its contribution to care costs and creating a ‘Care Wise’ guidance service to encourage people to plan ahead.’
The high cost of care – especially when spread across a number of years as people live longer – can quickly eat into the savings of pensioners.
On top of this, care costs can also greatly reduce the value of estates, as some pensioners will need to use the value of their home to pay for care.
While you can defer the sale of your home if you need care with a council-arranged loan, these will have to be paid back, usually after death.
If your spouse still lives in your home, it won’t be included in the care fee assessment.
Are you worried about cost of later life care – either for yourself, relative or friend? Get in touch: editor@thisismoney.co.uk