Adults relying on an inheritance that will be eaten up by long term care fees
Children underestimating cost of care
The generation who have relied on 'The Bank of Mum and Dad' may unwittingly become 'The Bank of Sons and Daughters'. As parents fail to save for long-term care fees, children may be forced to forgo their inheritance to pay for care or stop working to look after elderly parents. The findings are revealed in a study released today by Saga Care Funding Advice Services.
Only one in ten adults have seriously discussed long-term care funding with their parents and almost half (47%) underestimate its cost. This is despite figures showing that care home fees are set to double in the next twenty years* meaning that all adults could face huge bills for either their own care or that of their parents. Most worryingly, over half of people (56%) with parents in their 60s have not discussed ways to meet the cost of long-term care at all – despite them being in the key age bracket where solutions need to be discussed and plans made.
The Saga study also revealed a series of underestimations and misunderstandings in how people anticipate their parents would pay for long-term care. The annual cost of care is between 25,000 and 30,000, however, 47% of people underestimate the bill by as much as 20,000 a year. Even considering these massive miscalculations, over half of people (57%) think it likely that any potential inheritance will be 'eaten up' funding long-term care.
Once informed of the true cost of care, over a third (36%) of adults think that parents will be forced to turn to the 'Bank of Sons and Daughters' as they will not be able to afford their own care. A quarter expect their parents will have to be looked after by a family member to save money and over one in ten (11%) feel that they or their siblings will have to foot the bill directly. More surprisingly, 64% of people would consider caring for elderly parents themselves in order to protect an inheritance or family assets, even stopping work to do so.
Saga comments "The cost of care is not always something people think to talk to their parents about, but it is vital to start planning as early as possible. As this research reveals, there are a huge number of people who are relying on an inheritance from their parents, though underestimate the cost of long-term care. By not discussing the issue and making provisions, they are neglecting the fact that their parents may be facing a situation where they will be forced to turn to their children for financial help. With careful planning this can be avoided".
For information on long-term care contact Saga at www.saga.co.uk/money-shop/care-funding or phone 0800 056 6101.
* Forecast commissioned by Laing & Buisson November 2007 exclusively for Saga Research carried out by Opinium Research for Saga Care Funding Services between 17th and 21st of July 2008 amongst a UK representative sample of 2,209 respondents.
For further press information please contact the Saga Press Office on: 01303 771529.