Later-life care costs: 6 stats you need to know

It’s not something we like to think about. But the prospect of needing care in later life is a reality hundreds of thousands of us will have to face.

Fees for care have become eye-watering and it’s almost impossible to know whether you will need it or not. This means it’s tempting not to think about it at all when making financial plans for your retirement. But, before you do that, make sure to consider these six shocking statistics.

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1. More than a third of women are likely to need later-life care

Recent research on how likely you are to need later-life care is hard to come by. However, a paper by the University of Kent back in 1997 puts the risk at around one in three (36%) for women at the age of 65.¹

For men aged 65, their chances of needing care are smaller but still significant: 20% or one in five men.

Much has changed (including life expectancy) in the 28 years since that paper was released. However, the fact people are living longer suggests more of us may now be needing care.

Calculations by an independent commission in 2011 estimated that around one in 10 people at age 65 will face future lifetime care costs of more than £100,000.²

2. Average care home fees have jumped to £50,000 a year - and it’s a postcode lottery

Care home fees have been spiralling. Between 2022 and 2024, average fees leapt 20% to £949 per week - or around £50,000 per year - for a bed in a care home, according to LaingBuisson, a healthcare research company.³ If you need nursing care, that number is even higher: £1,267 per week or approximately £66,000 per year.

However, it is very much a postcode lottery. For those living in the North West, average care home fees are lowest in the country (at £799 per week). Whereas, in the South East, the most expensive place for care, you’ll be facing average weekly fees of £1,152. That’s a difference of more than £18,000 per year based on where you live.

The government had planned to introduce a lifetime cap that would mean no one in England would pay more than £86,000 for their care. But this was scrapped by Rachel Reeves last year as part of attempts to rein in government spending.

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3. More than half the requests for government-funded social care result in no support, advice or signposting

There is some level of government funding to cover the cost of care - but in all likelihood, you will be footing the bill yourself.

If you have less than £23,250 in savings, there’s a chance your local council might cover some or all your care costs. But it will only do this for those with the greatest needs and smallest means to pay. The council will do a needs assessment to assess your care needs, and a means test to assess your finances. If you have more than £23,250 (including the value of your property), you will have to pay for your own care until your wealth falls below that limit.

The £23,250 limit only applies in England and Northern Ireland. In Scotland and Wales, it is £35,000 and £50,000 respectively.

Being able to apply for state funding for care does not, however, mean you will get it.

Research by the charity The King’s Fund found that more than half the requests for local government-funded social care in England in 2022/23 resulted in no support, advice or signposting.

4. The average woman could deplete her entire pension savings on care in three years

The average man in his 60s has £228,200 in pensions wealth and the average woman in her 60s has £152,600, data from the Office for National Statistics show.⁴

Based on average care home fees of £50,000 a year, a man in his 60s needing care could deplete his entire pension savings in around 4.5 years. For women, the situation is even worse. Care home fees could eat up their pension in just over three years.

This is very concerning given the earlier statistics which suggest that one in three women will need later-life care.

Research by Bupa found that the average stay in a care home is 801 days - or 2.2 years.⁵ However, around 27% of people stay for more than three years.

5. One in six people have not thought about how they’d pay for care

If you need it, care can be one of the most significant costs you face in retirement - putting a huge strain on your finances. And yet thousands of older people have not thought about it at all or factored it into their financial plans.

According to research by Vitality, the insurer, nearly two-thirds (61%) of people aged 55–64 are not confident about how they will meet the cost of social care in retirement.⁶ What’s more, one in six (17%) have not thought about it at all.

There are various ways you can plan for the cost of care - including building up an investment pot for this purpose or purchasing a care-fees annuity to help cover any potential costs.

• Read: How can my investments fit into financing for later life care?

6. The UK needs another 144,000 care home beds just to meet population growth

The UK’s ageing population is set to put severe pressure on care homes - likely pushing up prices even further.

The number of people aged over 80 years is forecast to increase by 1.1 million between 2022 and 2032 to 4.5 million, according to Savills, the estate agency.⁷

Based on this, it calculated the UK needs to build an additional 144,000 care home beds over the next decade, or 14,400 new beds each year, just to keep up with population growth.

More older people and not enough beds could push care home fee inflation beyond the 20% we saw between 2022 and 2024 - putting even more pressure on the savings of families needing care.

The government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online at www.moneyhelper.org.uk or over the telephone on 0800 138 3944.

Fidelity’s Retirement Service also has a team of specialists who can provide you with free guidance to help you with your decisions. They can also provide advice and help you select products though this will have a charge.

• Read: Inheritance: is it too late to give gifts to my grandchildren?
• Read: Unpacking inflation: the secret threat to retirement plans
• Read: Autumn Budget: inheritance tax and other possible changes

Source:

¹ PSSRU. 11.97
² GOV.UK. 12.09.24
³ LaingBuisson. 29.02.24
⁴ The Telegraph. 10.01.25
⁵ PSSRU. 01.11
⁶ Vitality. 08.11
⁷ Savills. 2023

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment you should speak to one of financial adviser or an authorised financial adviser of your choice.