Millions of words have been written about the impending crisis in eldercare in mature economic societies. Advances in nutrition, medicine and safety mean that people are living longer with significantly increased retirement periods in which they will need to rely on their savings and/or the state pension to live.
A new report by the Centre for the Modern Family (CMF) commissioned by Scottish Widows, highlights the growing reliance on younger relatives helping to fund their parents and grandparents eldercare and the growing financial and emotional pressure this is putting on them.
The Cost of Care report is an ongoing investigation into the implications of an ageing population but its recently published first chapter has already provided some thought-provoking insights.
- One in four people admit they have no idea how they would cover care costs for elderly relatives.
- 50% of UK adults believe the responsibility of helping parents to pay for care should be shared between siblings. With over nine out of ten (92%) people not saving anything to help their parents or other older relatives, this could lead to a significant shortfall in support.
- Almost one in four people (24%) claim they would need or expect to rely entirely on state support, but two in five (42%) admit they don’t actually understand what benefits – both practical and financial – they would be entitled to.
- The report also focusses on the emotional impact that caring for the elderly can have from the financial strain many undergo and the sacrifices they are forced to make to cover the cost of care for themselves or a relative, to having to make major adjustments such as re-mortgaging their house or taking a second job.
Even if elderly parents have built a large pension pot it may need to fund a longer period of time than they had expected and may no longer be sufficient, as health care costs continue to rise and the Government’s ability (or willingness) to pay dwindles.
This report offers some intelligent recommendations that will help in the long-term – evolving auto-enrolment pension schemes to include income protection and care costs, encouraging employers to consider more flexi-working to accommodate work and care provision and driving greater awareness of the need for families to discuss their care needs.
Jane Curtis, Chair of CMF, said:
“The number of people in care in the UK will almost double by 2035. Our research shows that an over-reliance on relatives and the state could put families in serious financial difficulty. It can seem difficult to know how to prepare for the future, but to avoid a financial care crisis we all need to have an honest discussion on later life care as early as possible so no one is left footing a bill they can’t afford.”
It has never been more urgent to start thinking about the financial implications of looking after ageing parents or, indeed, making adequate provision for your own retirement and future care. A head in the sand won’t make the issue go away; start planning now – and if you don’t know where to begin, call us.
We are chartered financial planners and can help you make the right decisions about paying for eldercare.