UK elderly parents receive £39 billion in unpaid care a year

A new report from insurance and investment group LV= has revealed that UK adult children will provide their elderly parents with the equivalent of £39 billion in unpaid care this year. The 2009 LV= ‘Cost of a Parent' report also highlights the financial and emotional pressures the ‘sandwich generation' in the UK face during the recession, as they anticipate rising care costs and weakening financial positions should their parents or in-laws need professional care.

The survey of 2,000 people by the UK's largest friendly society reveals that adult children give up almost 36 hours each month, the equivalent to an extra full-time working week, at an unpaid annual cost of £3,873. This equates to over 468 unpaid hours in care every year helping their elderly parents with their care and general assistance.

The LV= research highlights that a residential care home providing nursing care can cost £88,140 over a 30 month period, the average duration of an elderly person's stay in a care home. This is £98 per day, yet on average UK adults underestimate the cost by 40%.

The Cost of a Parent

The overall cost of caring for a parent is £132,549. This figure is made up of the amount of unpaid care adult children invest in their elderly parents over a ten year period, as well as the cost of residential nursing care. One in five adults (21%) regularly provide care and assistance to their elderly parents or in-laws, according to the research.

Mike Rogers, Group Chief Executive of LV= said: "Our report has identified not only how much unpaid support adults give their elderly parents every year, but also the growing financial and emotional pressure the ‘sandwich generation' in the UK are facing as a result of the current recession. The care that elderly relatives receive from their families is invaluable but there is clearly a growing concern that financial support for rising care home costs may simply be unavailable. Added to these concerns the ‘sandwich generation' are also walking a fine tightrope between caring for their elderly parents, surviving the recession, and also supporting their own children over 18 years old as they make their way through life."

Paying for parents' care

With the UK now deep in recession and unemployment rising to 1.97 million, almost half of adults with elderly parents (49%) say they are less financially equipped to meet any care costs that they may have contributed to a year ago. More than 30.4 million adults (63%) also believe the cost of professional care, for example a residential care home or a residential nursing home, will rise as a result of the recession. Perhaps triggered by the view that professional care will now be more expensive as a result of the economic downturn, three-quarters of adults (78%) say they would rather look after their parents at home rather than put them into residential care - an increase of 6% over the last six months.

Adult children make sacrifices

The financial burden of care, both today and in the future, is a clear concern for adult children. Already people are making big sacrifices in order to assist their parents, with one in seven (13%) saying support for parents needing care is a higher priority than financial support for their own children. In addition, over one third (38%) of those with parents who need care say they have had to put some aspect of their lives on hold in order to look after them.

Tough financial love for families

One in twenty adults (6%) are facing the financial tug of love by financially contributing towards their elderly parent's care, and at the same time supporting their own children over 18 years old. On average, adults in this ‘sandwich generation' spend over £185 each month on their parents and their older children, equating to £2,227 each year. Overall, ‘sandwich generation' families are spending £5.9bn supporting their elderly parents and their older children.

How the care costs would be met

Six out of ten (62%) adult children said their parents would use their savings to pay for their care in a residential care home or nursing home. Despite this, four out of ten (44%) adult children still expect to receive an inheritance from their parents.

Half of adult children (50%) said their parents would release equity from their property to pay for care bills, with four out of ten (40%) adult children saying they would pay for it out of their own pocket.

A care savings gap

Adult children anticipate that their parent's funds from either their personal savings, proceeds from a house sale, or releasing equity from their home would last just over two years (25 months). Based on the average savings balance of £8,000, adult children would only be able to fully fund their elderly parents care in a residential care home for 17 weeks, or just over four months, based on an average weekly cost of £467. This would reduce to just 11 weeks, under three months, for residential nursing home care based on a weekly cost of £678.

With these types of costs it is no wonder that more than a quarter of adult children (28%) admit they are worried that their parents may have to rely on them for financial support in their retirement years. Almost four in ten (39%) say they are already struggling themselves in the current economic climate.

Mike Rogers continues: "Releasing equity from an elderly parent's home can provide relief from the burden of financing care, and increases the options for elderly people to plan ahead. An appropriate equity release product with full family support and understanding could also potentially enable an elderly parent to have alterations made to their home to enable them to live independently for longer. It is important though that people take appropriate independent financial and legal advice before taking this step.

"Releasing a sum of £26,000 from a property could help fund four years' worth of home care, with a carer visiting for two hours each day to help with domestic tasks and personal care. This could be invaluable if this kind of professional care is required and it makes better economic as well as emotional sense, compared with the alternative of selling the property to help fund the care."