People in the UK are underestimating the cost of elderly nursing care homes by a total of £7bn each year, equivalent to £317 per week per person.

New research from Scottish Widows’ independent thinktank, the Centre for the Modern Family, found on average that UK adults estimated that residential care costs averaged £549 a week, more than £300 below the actual figure.

Typically, it costs £866 per week for a place in a nursing home and 25% say they don’t know how they would cover these costs. Just 15% are saving money on a monthly basis to pay for their own care, while almost half say they avoid thinking about the issue as it makes them feel stressed.

Nursing home costs in the UK per week vary considerably from £666 in the North East and £670 in Northern Ireland to £949 in London and £1,041 in the South East.

Source: Centre for Modern Family

Some 49% of UK adults say they will have to rely on relatives to help them cover costs, which could leave families in difficult sitautions, as over 42% have £2,000 or less in life savings to fall back on, meaning they could only cover the cost of care for a maximum of two-and-a-half weeks.

A company spokesperson said: “With an ageing population and growing care costs, the nation could be facing a care funding crisis.”

As part of the research by the Centre for the Modern Family, figures were calculated based on the £317 underestimate of the cost of residential nursing care per week multiplied by the current number of UK over-65s in care (421,100 including those requiring nursing) and multiplied by 52.

Chair of the Centre for the Modern Family and non-executive director of Lloyds Banking Group Insurance Jane Curtis, said: “The number of people in care in the UK will almost double by 2035. Our research shows that an over-reliance on relatives and the state could put families in serious financial difficulty.

“It can seem difficult to know how to prepare for the future, but to avoid a financial care crisis we all need to have an honest discussion on later life care as early as possible so no one is left footing a bill they can’t afford.

“As for state provision, it’s clear that many people simply don’t understand the social care benefits and support system. Providing clarity and raising awareness of what is and isn’t available is critical to helping people prepare for the longer-term future.”