Currently, the average single pensioner would have a £53,853 annual shortfall in income if they require nursing care in a care home, based on average pensioner incomes, and uprated for inflation.
Meanwhile, a single pensioner retiring at 65 and potentially needing nursing care in a residential care home setting in 20 years’ time would need to save around £500 per month for two decades to afford nursing care for two years at 85, according to calculations by Interactive Investor.
It revealed that someone who is currently 65 years old and retiring could need around £200,000 to fund two years in a care home with nursing care by the time they reach their mid-80s.
The platform added that nursing care cost pushes up the bill for care home fees because residents require higher levels of care.
Currently, care home residents with assets worth over £23,250 currently fund their own care. But the rules are due to change in October 2025, with some costs capped at £86,000.
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But Interactive Investor explained that the cap only applies to personal care costs and not accommodation or other costs, so many care home residents will still face a substantial bill as assets deplete rapidly.
Residents with assets of between £20,000 and £100,000 will have subsidised care home fees, “but in many cases will still end up paying the majority of costs”.
‘Big worry for retirees’
Alice Guy, head of pension and savings at Interactive Investor, said: “It’s almost impossible to plan for care home costs, which are hugely expensive and very difficult to self-fund for any length of time unless you have extremely substantial assets. Care home fees have soared in recent years… it’s rare to have enough pension income to cover the bulk of the costs.
“Not being able to afford care is one of the biggest worries for retirees, who would love to pass on wealth but sadly could see their plans slip through their fingers. It takes a lifetime to build up wealth, but only a few years of expensive costs to see that wealth rapidly dwindle.”
Guy said that for those planning ahead for retirement, it’s useful to know more about how much care home fees could cost.
“The average retiree currently needs around £400,000 to fund a moderately comfortable retirement for 20 years, but that doesn’t include care home fees, which could add up to £200,000 to your costs, depending on the rules when the time comes.
“Someone with a modest wealth could still see their assets dwindle away, even with the new fee cap. It only applies to some of the costs and won’t kick in until you’ve already spent £86,000 on personal care,” she added.
