Wealth Connexion explains why crisis planning with your finances is crucial when entering into aged care.
Many families are caught financially unprepared when a loved one suddenly needs complex care. Without proactive planning, you risk exhausting your savings to cover aged care fees, leaving little remaining. Even worse, you may be forced to sell assets in a rush under unfavourable conditions. However, with planning and guidance from aged care financial advisors, you can safeguard your finances and gain greater control over your future.
Common Financial Risks
As we age, there are some common financial risks that can quickly deplete our savings and put our financial security in jeopardy. Being aware of these risks is the first step in safeguarding your finances for the future.
One of the biggest risks is unexpected health care costs. A serious illness or chronic condition often comes with expensive medical bills, prescriptions, and assistive devices which are frequently not fully covered by insurance or government programs.
Market volatility is another threat that can have major impacts on your portfolio, including fluctuating interest rates and inflation, which can diminish your assets.
There is also the risk of outliving savings, known as longevity risk. As life expectancies increase, retirees must financially plan for the possibility of up to 40 years of retirement. Making savings last for an extended aged care retirement takes careful budgeting, investing and withdrawal strategies.
Creating a Financial Plan to Prepare for Crises
Planning ahead is critical when it comes to aged care finances – and a robust financial plan is a key part of this. Here are some key steps to take when putting together your financial plan to help mitigate the effects of an unexpected crisis.
Take stock of your current assets and income sources
Make a list of your savings, investments, superannuation, pensions, rental properties, and any other assets you may have. Understanding your full financial picture is the first step.
Project your future costs
Research the potential costs of different types of aged care such as in-home care, respite care, residential care, etc. Factor in daily living costs as well. Aged care financial advisors can help with this.
Identify potential funding sources
Your financial plan should cover how you will pay for aged care. This may include your own assets, Government support like the Age Pension, or even family support.
Look for ways to boost your assets
Well in advance of needing care, you may want to sell non-essential assets, consolidate super funds, or change investments to grow your savings. The earlier you start planning, the more options you’ll have.
Protect your assets
Structure your assets smartly and take steps to protect assets like your family home. This is where financial advice can help identify asset protection and estate planning opportunities.
Review and update the plan regularly
Your needs and financial situation may change over time. Regularly revisit your plan to ensure it still aligns with your circumstances and goals.
Get Expert Financial Guidance
For complete peace of mind during difficult times, contact the team at Wealth Connexion. Our aged care financial advisors have decades of experience and can provide personalised guidance and support so that you can access the care you need.
