The chancellor has been urged to ring-fence £2.5bn in next week's budget for social care and to create a joined-up system, including an NHS Dementia Fund to help cover costs.
Charity the Alzheimer’s Society said 850,000 people were currently living with dementia costing the UK £26.3bn a year, which was largely shouldered by the families affected.
But despite an ageing population, the social care budget has not increased since 2010, aside from £2bn in last year’s Spring Statement and the recently announced £240m winter boost, it claimed.
Jeremy Hughes, chief executive at the Alzheimer’s Society, said it was anticipated that one million people living in the UK will have dementia by 2021.
He said: "With the current care system leaving families in financial ruin and the general public largely oblivious, we are sleepwalking into a crisis.
"Recent funding announcements will only prevent the immediate total collapse of support, and only for those who do get some state help. The government must recognise the true cost and guarantee everyone with dementia access to the care they want, need and deserve."
The charity warned the British public was "sleepwalking into a national care crisis" because of a lack of awareness of the cost of later life care.
A poll conducted among 1,397 adults by YouGov, on behalf of the Alzheimer’s Society, found 81 per cent of people were unaware of the cost of dementia, which the charity claimed could amount to £100,000 throughout an individual’s lifetime.
The research highlighted the need for financial planners to consider later life care costs when advising clients on retirement planning.
Of those polled, 46 per cent said they did not know how much care costs would be, while the most common estimate was between £25,000 and £50,000.
Fiona Tait, technical director at Intelligent Pensions, said it was vital that advisers stress the importance of a "sustainable income" throughout retirement, which had to contain provision for unexpected events and the cost of care.
She said: "Care is something that is considerably more likely to be needed than it has been in the past because we are living longer, but not necessarily healthier. Therefore, it makes sense that potential care costs are considered in the general calculations of sustainability of income."
Ms Tait added that it was important for Power of Attorney arrangements to be made while individuals are still legally capable, to ensure that loved ones can assist them at their time of need.
The government is currently considering new funding options for later life care in a green paper due to be published this autumn.
A previously proposed £72,500 cap on social care had been scrapped in December.
