The average cost of a room in a care home is more than double the average pensioner income, representing a yearly shortfall of £14,568; new research has found.
The analysis from Prestige Nursing+Care found the cost of residential care has risen by 3.5% in the past year and 9.3% in the past two years.
Since 2012 the average annual cost of a single room in a residential care home has risen by £963 from £27,404 to £28,367. This is £2,414 higher than in 2011.
While pensioners' annual income has grown by 4.5% (£591) in the last year to £13,799, the gap between income and care costs has continued to increase.
The research said the average older person's saving pot of £14,217 would now only able to pay for six months of care. Combining a pensioner's average annual income with their savings pot still falls short of covering a full year of care in residential home by over £350 on average.
The research also highlighted regional differences between the cost of elderly care homes, with a room in the South East £7,405 more per year on average than in the North East.
Home care is another alternative for older people to consider - with 10 hours a week constituting an average of £7,200 annually. This is a quarter of the cost of a single room in a care home.
Jonathan Bruce, managing director of Prestige Nursing+Care said: "As the cost of care continues to outpace pensioner income, pensioners' shrinking savings pots are contributing to the worrying financial conundrum of how later life care can be funded.
"In trying economic times, relying on family members to foot the bill isn't always a viable option, while the governments' purse strings are tighter than ever with £11.5billion of spending cuts planned. While the government's proposed care cap will help some older people, they will still have to incur a significant financial outlay to reach the cap"
Simon Bottery, director of policy and communications at Independent Age said: "Care choice should be based on need not costs so it's essential that people get good advice about their rights to state-funded care and their financial options if they are self-funding.
"This becomes even more important as care bills rise and will further increase as the proposed ‘cap' on care bills is introduced in 2016 because the proposed system is complicated and far from comprehensive.
"It's also vital that people understand the benefits of different types of care - care at home, supported housing and residential care - so they can choose the one that best fits their needs and aspirations."
