• Only 3% of Baby Boomers and Generation X expect to live in residential care in old age¹, when in reality nearly 15% of over 85’s do currently².
• People understand the costs of residential care. On average people believe it will cost £27,747 per annum to live in residential care in old age; on average it costs £31,200 per annum³ - they just don’t think they’ll need it.
• Over half of Baby Boomers (54%) and nearly half (43%) of Generation X surveyed said that they will NEVER save for long term care.
• Only 18% of Baby Boomers and 30% of Generation X think an individual’s property should be used to pay for social care.
• Millennials have a better understanding of the need for residential care than older generations with a fifth expecting to live in it, nearly 80% expecting to save for it and over half (52%) happy for property to be used to pay for it.
• 64% of Baby Boomers are going to live beyond 85, but only 46% expect to; 69% of Generation X will live to 85 or older but only 38% are anticipating this.

Baby Boomers and Generation X may not be facing the realities of their potential need for residential care, according to research¹ from Hymans Robertson, the leading pensions, benefits and actuarial consultancy. Only 3% of Baby Boomers and Generation X are expecting to live in residential care in older age, massively unaware of a reality in which almost 15% of those aged 85 and over are currently living in residential care² and the possibility that this will rise with increases in life expectancy.  

When it comes to cost, however, there seems to be a better understanding. On average people believe it will cost £28k per annum to live in residential care in old age, with Baby Boomers estimating it will be £30k. That is pretty accurate as the average residential care costs per annum in the UK are £31,200³. But, they are not saving for it. Over half of Baby Boomers (54%) and nearly half (43%) of Generation X surveyed said that they will NEVER save for long term care. 

It also doesn’t appear that they want to consider relying on the wealth in their homes to pay for social care either, with only 18% of Baby Boomers and 30% of Generation X saying that they thought an individual’s housing and other forms of personal wealth should be used to pay for care in old age.  

Karen Brolly, Head of Products, Life and Financial Services, Hymans Robertson says:

“Baby Boomers and Generation X need to face the reality that they may need to live in residential care as they get older. It is evident that they understand the high costs of residential care but they just don’t think they’ll need it and are simply not saving for it. This leaves a big question mark over who will pay for this care, especially as life expectancy, often with ill health, is rising. These generations don’t seem to be expecting to use their property assets as the source of income, but it may be the necessary route to foot the bill.” 

In contrast with the older generations, Millennials seem to be more accepting of the fact that they may need to pay for care in old age. 22% of Millennials said that they expected to live in residential care when they were older and 23% expected this to be care with nursing. Only a fifth of Millennials (22%) said that they would never save for long term care – a sharp contrast to the older generations where half will never save. They are also much more willing to support the idea of an individual’s property funding their social care costs with over half (52%) believing that this was a good idea.

Commenting on the impact of increased life expectancy, Steven Baxter, Head of Longevity Innovation, Club Vita, added:

“It isn’t just the realities of where they might live in old age that people are unprepared for, but also how long they will live. Almost two thirds (64% of the average Baby Boomer age group are likely to reach the age of 85 or more⁴, but only 46% think that they will live to that age or beyond. Equally, over two thirds (69%) of the average Generation X age group are likely to live to 85 or older, but typically only 38% think that they will live that long. There is also a high probability that at least 7 years of their later life will be spent in reduced health⁵. Living longer, and particularly in ill health, will increase the chance that they will need to live in residential care, but they have just not grasped that this will apply to them.”

Karen Brolly concludes:

“As a nation we are clearly not preparing financially for living in old age. Planning for the future means understanding the realities of residential care costs. We need increased awareness of the fact that we are living longer, but that often a long life can include a period of ill health. That means many of us will require residential care. If people don’t take action now, they could face a harsh reality check when it’s too late. The Government is already struggling with a social care crisis. We need to ask ourselves, what financial plans do I have in place to pay for this?”

Footnotes:

^{1 Online survey by Opinium questioned 3,081 adults.  Fieldwork undertaken August 2017
2 Care of Older People, UK Market Report, Laing and Buisson, 2017
3 Cost of residential care without nursing - Care of Older People, UK Market Report, Laing and Buisson, 2017
4 Club Vita analysis
5 Club Vita calculations based on ONS statistics}