Care costs are higher than the average pension pot, research by LV= suggests.
The average length of stay in a care home has increased over the last decade from 829 days to 955 days, or around 2 years and 7 months. This care costs an average of £75,000 per person, a figure higher than the average pension pot.
The issue of care costs is compounded by the fact that most retirees enjoy a number of years of active retirement, while still spending their pension savings, before entering care.
There is also a significant gender disparity, with 23% of women approaching retirement relying solely on the state pension, compared to 9% of men.
Other findings from the study are:
- 22% of retirees have sold their home to cover the costs
- 38% used their savings to cover the costs
- 25% of adults with parents in care contribute their own money towards care costs.
The government has announced that its proposed cap on care costs in England will be delayed until 2020.
John Perks, managing director of LV= Retirement Solutions, said:
“Although many of us leave the workplace in good health, as we are living longer with the average retirement now 17 years long, the likelihood of us needing residential or domiciliary care is increasing.
“In addition, we are also seeing a rise in the length of time being spent in care. This highlights a very real need for many to consider a more flexible retirement income solution such as a fixed term annuity.
“We would encourage those individuals in and approaching retirement, to seek financial advice as to how they can make the most of their pension pots and potentially meet these costs.”