BACKGROUND: Little is known about how the proportions of dependency states have changed between generational cohorts of older people. We aimed to estimate years lived in different dependency states at age 65 years in 1991 and 2011, and new projections of future demand for care. METHODS: In this population-based study, we compared two Cognitive Function and Ageing Studies (CFAS I and CFAS II) of older people (aged ≥65 years) who were permanently registered with a general practice in three defined geographical areas (Cambridgeshire, Newcastle, and Nottingham; UK). These studies were done two decades apart (1991 and 2011). General practices provided lists of individuals to be contacted and were asked to exclude those who had died or might die over the next month. Baseline interviews were done in the community and care homes. Participants were stratified by age, and interviews occurred only after written informed consent was obtained. Information collected included basic sociodemographics, cognitive status, urinary incontinence, and self-reported ability to do activities of daily living. CFAS I was assigned as the 1991 cohort and CFAS II as the 2011 cohort, and both studies provided prevalence estimates of dependency in four states: high dependency (24-h care), medium dependency (daily care), low dependency (less than daily), and independent. Years in each dependency state were calculated by Sullivan's method. To project future demands for social care, the proportions in each dependency state (by age group and sex) were applied to the 2014 UK [corrected] population projections. FINDINGS: Between 1991 and 2011, there were significant increases in years lived from age 65 years with low dependency (1·7 years [95% CI 1·0-2·4] for men and 2·4 years [1·8-3·1] for women) and increases with high dependency (0·9 years [0·2-1·7] for men and 1·3 years [0·5-2·1] for women). The majority of men's extra years of life were spent independent (36·3%) or with low dependency (36·3%) whereas for women the majority were spent with low dependency (58·0%), and only 4·8% were independent. There were substantial reductions in the proportions with medium and high dependency who lived in care homes, although, if these dependency and care home proportions remain constant in the future, further population ageing will require an extra 71 215 care home places by 2025. INTERPRETATION: On average older men now spend 2·4 years and women 3·0 years with substantial care needs, and most will live in the community. These findings have considerable implications for families of older people who provide the majority of unpaid care, but the findings also provide valuable new information for governments and care providers planning the resources and funding required for the care of their future ageing populations. FUNDING: Medical Research Council (G9901400) and (G06010220), with support from the National Institute for Health Research Comprehensive Local research networks in West Anglia and Trent, UK, and Neurodegenerative Disease Research Network in Newcastle, UK.