02-Feb-2011
With odds that 68 per cent of women aged 65 and 48 per cent of men aged 65 will need to access aged care services at sometime in their remaining life, it is vital that a strong focus is placed on planning and funding for this care by both government and retirees. This needs to be supported by financial planners and the financial services industry.
No-one can afford to ignore the implications of funding aged care. The Productivity Commission recently released its Draft Report titled Caring for Older Australians to review the system and funding for aged care in Australia. The report considered the costs and access to residential aged care. A final report is due at the end of June and it can be expected to lead to significant changes.
Retirees can no longer afford to ignore planning for aged care and the impact on retirement finances as the statistics show that care costs are a normal expense of growing old. The costs of aged care, both at home and in residential facilities, should be considered at all stages of financial planning. This includes starting to save for retirement and determining income and capital needs, as well as planning the pattern of expenditure and managing budgets throughout retirement.
To pay for aged care, the Report identified that the government can either:
It is not surprising that the Report made recommendations that would increase a person’s requirement to pay for their own aged care with a safety net for those of limited means.
In particular, consideration is being given to how people can draw on their housing wealth to contribute more to the cost of their care. This could include options to sell the home or use equity release schemes. Other alternatives raised included greater savings or insurance to cover care costs. The means test assessment rules could also change.
Specific recommendations proposed include:
If you are considering entry into Aged Care premises (or looking at options for a family member), please contact us to organise a complimentary discussion of the various alternatives and which one(s) suit your situation best.
Contact your Nexia Court adviser or click here to find out more information on Aged Care advice.
