The public purse could save £14.5bn over 50 years if there were enough retirement housing to allow just one couple in every 50 older home owners to downsize into specialist accommodation.
Analysis from housing association Anchor and think tank the Strategic Society Centre says that older people living in inappropriate housing costs taxpayers £9,700 per person or £19,400 per couple over ten years in increased care and health costs.
The cost of providing local authority social care over ten years is £18,600 per person or £37,200 per couple.
The financial impact of younger people being unable to get on the housing ladder is estimated at £54,800 per household.
Well over half (63%) of people aged 55-plus live in housing with two bedrooms or more and want to downsize, but retirement homes make up just 2% of the country’s housing stock, Valuing Retirement Housing says.
Jane Ashcroft, chief executive of Anchor, called on central and local government to prioritise building homes for older people.
She said: “Those older people that do want to move shouldn’t be trapped due to a lack of suitable retirement homes. We have failed to address this as a country and for the first time the full impact has been analysed.
“This is not a plea for financial support from the State. In fact this is an opportunity to save billions. With the ageing population growing all the time, we must prioritise homes for older people now.”
The 2011 Census data analysed in the report showed 6.5m older people lived in owner-occupied homes in England, of whom 4.7m owned their own home outright, the remainder with a mortgage or some form or shared ownership. Nearly 1.5m lived in social rented accommodation and about 0.5m lived in a private rented or rent free home.
Across the geographical areas in England and Wales, 70% to 80% of older people live in owner-occupied homes, the report stated.
In all areas of the UK, more than half of the 65-plus owner-occupied group (72%) had three or more bedrooms in their home.