To cover this deficit, over-55s are likely to use their savings and investments (£10,468) but there is still a shortfall of £13,642 (26%) – even without factoring in costs for any specialist medical care.
Furthermore, these figures do not include basic living costs such as clothing – meaning that the average shortfall will be even greater when these are factored in.
Regional differences are also apparent and while those in the North East (+£3,156) would find that they have some "surplus" to pay for sundries, those in East Anglia (-£25,808) and London (-£24,013) would be significantly worse off.
The figures show income and savings will generally not cover the full cost of two year’s worth of residential care in the home of a persons choosing. Therefore, they will either need to find alternative sources of funding or turn to the council for assistance if their assets dip below £23,500.
Obtaining council assistance can be a complex lengthy process and could even mean that people will need to move to another care home at a time when they are very vulnerable. One potential source of funding is to use the equity in their homes as the average value of an over-55s house (England, Wales and Scotland) is £227,448 or £175,542 more than the cost of care.
While some people might be in a position to sell in order to access the equity, others find that they have family living in the home or simply want to pass on the property to their heirs. Therefore, equity release provides an option whereby they can release some of the equity in their home to help with these bills.
Andrea Rozario, Director General of SHIP, said: "There is a very real chance that over-55s might need to pay for some form of residential care as they get older, and as these figures show they will struggle to pay for this from their income and savings. Anyone who has assets of more than £23,500 will be expected to fund their entire care bill themselves.
"There are certain parts of England, Scotland and Wales where people do not have sufficient savings or a high enough income that they would be able to cover even the cost of basic care needs. And if we take into account further medical requirements – or indeed factor in a budget for clothing and lifestyle choices then this situation is even worse.
"Therefore it is clear that alternative funding options need to be considered, especially if people still want to be able to choose their care home or maintain a certain standard of living. Their home is one of the largest assets at their disposal, and today’s over-55s are fortunate in that they are one of the generations who have accumulated significant housing wealth. By using it to fund the cost of care, they can eliminate the additional stress of financial difficulties – while retaining their home."
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