The UK’s ability to support tens of millions of elderly people will collapse by 2029 unless the government takes decisive action, a new study by Irwin Mitchell and the Centre for Economics and Business Research (Cebr) predicts. Here Kelly Greig, head of later life planning explains.
Several factors make up the report’s tipping point calculation including current care home capacity, state funding levels and pension wealth, and the signs point to the UK reaching a shortage of supply in residential retirement homes by 2029.
The Government has failed to act on social care reform in recent years, with the long-awaited green paper promised since 2017 put on hold indefinitely.
For years now we have been raising awareness of the impending care crisis the UK is facing. The fact that we now know the elderly care system will collapse at the end of this decade is a stark warning.
It’s now been 10 years since funding levels for social care were adequate, and the cracks are turning into chasms. A decade on we have less people eligible for funding support, more families taking on unpaid labour to look after their elderly loved ones and workers needing to save unsustainable levels of money into their pensions just to afford care in later life.
We need a bold and fast-acting plan before it is too late. The elderly care sector is already on its knees, and continuing to ignore the issue would be a disservice to the tens of millions of people that will be reaching old age in the next twenty years.
The report reveals some shocking statistics around the crisis, highlighting the urgent need for action amidst an ageing population and growing levels of dementia diagnosis rates. The Alzheimer’s Society predicts one million people will have dementia by 2025, doubling to two million by 2050.
There is already a funding shortfall which is anticipated to increase to £1.5bn for 2020/21. Looking at current spending predictions, the report has found this shortfall will increase by a massive 57% in just five years to hit £3.5bn.
The report also found even with the auto-enrolment pension scheme introduced in 2012, many will still find their pension pots lacking enough funding for care. The report advises that at present, workers will need to save hundreds of pounds more into their pensions each month in order to cover the shortfall.
A worrying wealth gap is forming that may create a tiered elderly care system, with only around the top 10% of retired households by income can afford to pay for nursing homes from their income.
Care home capacity is also an urgent issue – while there are 460,000 beds available this year, the pressure of the ageing population are soon to squeeze availability. If capacity is not increased, then the UK will reach a shortage of supply in residential homes by 2029.
As later life planning experts, we at Irwin Mitchell we can identify ways and support workers and families to prepare and plan today.
All of the problems the elderly care crisis is facing can begin to be addressed in the next nine years, providing we look for effective solutions right now.
There are steps families can take for their futures by considering care home fee planning alongside those other major financial commitments such as pensions and mortgages. Proper tax planning and mitigation can also go some way to help the public prepare for later life.
Treating later life planning as a financial priority will go a long way in making sure the British public are prepared for the realities of paying for elderly care.