More people believe they will have to sell their home to pay for long-term care in their old age, a survey has revealed, despite upcoming reforms designed to stop pensioners having to take such drastic measures.
The second annual Partnership Care Index has revealed that 40 per cent of adults over the age of 45 expect to sell their home in the event they have to go into care, up from 31 per cent last year.
in 2016 the Government will bring in reforms designed to limit the amount a person has to pay for residential care in their old age, and though assertions were made that this would prevent the elderly having to sell their homes, many pre-retirees are preparing to cash in on their most valuable asset.
Care costs: Pre-retirees believe they will have to sell their home to pay for long-term care.Chris Horlick, of enhanced annuity and equity release provider Partnership, said: 'Last year, we anticipated that property was likely to become a key source of funding for care.
'As the debate around the reform of social care funding in England has grown, so too has the speed of change in attitude, as people's belief in the state is replaced by reliance on their own means.
More... Government announces care fee caps, but 'most' will still have to sel their home Equity release could take over a million retirees out of poverty, providers claim - but critics tell them to improve terms Is equity release right for you? Find out more using our free guide Can you find a better annuities deal? Kick back and enjoy your retirement: What you need to know about annuities and how to make the most of your pension pot'It is believed that people over the age of 65 have £753billion of un-mortgaged equity in their property.
'Accordingly property is an important source of value for people in retirement who are asset rich but income poor.'
In 2006, the amount an individual pays for residential care will be capped at £72,000, and the Government will step in and provide financial support when a person's assets (such as property, savings and investments) are worth less than £118,000.
But £72,000 is still a hefty amount and, bearing in mind this only relates to the cost of care and does not take into account accommodation costs, then it is unsurprising that workers fear they will have to sell their homes to pay it.
It appears that that people are becoming disabused of the notion that the state will pay for their care, with the proportion who believe this will be the case falling from 52 per cent in 2012 to 37 per cent this year.
Paying for care: How respondents to the Partnership survey say the think will pay for residential care in the future.People are similarly realising that their pension income, savings and investments are not necessarily going to cover the cost of their care.
Concerns over a potential retirement income crisis in the future has prompted the Government to launch auto-enrolled pensions, while the equity release industry has called for the Government to endorse equity release as a valid option for pensioners to raise the cash they need.
Equity release sees retirees borrow money against the equity in their home, which is then taken out of the property's value - with interest - when they die.
Only 16,095 households used it in 2011, with many viewing it warily as it eats away at the value of their property and means they leave less to their relatives when they die.
There are however products which allows you to pay off the interest as you go along.
