Care costs test family budgets as parents seek to help children while safeguarding their own futures
Survey shows a scalable dilemma: nearly half of adults plan to gift to family but fear funding later-life care, while care expenses rise and thresholds for state support remain unchanged.
Rising care costs are forcing families to navigate a difficult trade-off between helping adult children onto the property ladder and funding their own later-life needs. Data gathered by Octopus Money, alongside industry commentary, show a growing tension as care bills climb and households weigh gifts against potential future expenses.
According to Octopus Money, about 45% of adults say they are holding back gifts to ensure they can cover care costs in retirement, while roughly 60% say they are setting money aside specifically for potential care needs. At the same time, around half of those surveyed say they want to support family members but worry the support could come at the expense of their own living costs.
Care costs remain steep and can vary widely. Independent nursing homes now charge more than £1,800 per week in a significant share of facilities, and the average yearly cost of care is about £80,000, according to Octopus Money. The state often contributes only up to a threshold, with rules dating back to 2010: people with assets above £23,250 typically fund their own care, while those with assets under £14,250 may qualify for help. This framework means many older people need substantial savings or assets to cover extended stays in care settings.
As a result, a broad portion of older adults hold on to cash and investments rather than gifting freely. About 60% of those planning to make gifts say they are setting money aside for care costs, while 67% of adults who intend to give say they would like to give more but feel constrained by future expenses.
Janie, a 60-year-old featured by This is Money, embodies the tension between generosity and self-protection. She says she wants to support her children and help them onto the property ladder, but she also worries about becoming a burden if she needs care later. Her strategy reflects a shift toward financial diversification: she has started investing through a stocks-and-shares ISA, remains risk-aware after guidance from a financial adviser, and has built multiple income streams from four jobs, including her own divorce coaching business. “For me, that means helping them get onto the property ladder and moving up it as their families grow,” she told This is Money. “I’ve learned to make my money work for me, and I’m not retiring any time soon.” She adds that professional advice helped her understand risk and the benefits of informed decision-making as she balances giving with safeguarding her own future.
Kristian Manton, a chartered financial adviser at Octopus Money, notes that pensions remain the most accessible pool for paying care fees, with immediate-needs annuities also offering options. Yet families are increasingly forced to sell property to fund care, which can erode inheritances without careful planning. “Pensions remain the most accessible source of funds for paying care fees and, outside of property, they are typically people’s largest asset,” he said. “But increasingly, families are having to sell property to fund care, and without proper planning, these costs can quickly eat into inheritances, leaving the next generation with far less than expected.”
The trend is shaping expectations among younger generations. Data cited by the report show that as many as 60% of Gen Z and 56% of millennials who stand to receive gifts or an inheritance expect them to help fund major life goals, including home purchases. A notable share—about 32% according to Hargreaves Lansdown—say they would need an inheritance to fund their retirement. Manton framed this as a looming, broader wealth transfer: a “great wealth transfer” on the horizon, but one that could be disrupted if families do not discuss what will be gifted or left in wills.
The overall outlook suggests a tightening landscape for intergenerational finances. While care costs surge and the state support framework remains dated, many families are attempting to strike a balance between enabling younger generations to hit milestones and protecting financial security for themselves in later life. The interaction of these pressures points to a future in which open conversation, planning, and diversified savings will be essential tools for households navigating both the property ladder and long-term care.
