We’re an ageing population; the media keeps reminding us, as does the government, but are we prepared for what this means? As a society? As individuals? One thing’s for sure – it’s something we cannot ignore.
According to the Australian Bureau of Statistics, in 2019 around 4.1 million Australians were aged 65 and over.
Consider for a moment: this figure shows those people contemplating aged care for elderly family members are fast approaching the age when they’ll need it themselves.
What this means is that as aged care becomes increasingly important, the need for aged care facilities is growing proportionately. As demand out-grows supply, costs associated with residential care can only go one way.
Fees are regulated
There are strict regulations governing aged care fees and charges. Aimed at consumer protection, a degree of flexibility within the guidelines enables aged care facilities to adapt the fee structures to meet their own financial pressures.
So as we age, and as we begin to consider the future care of not only ourselves but our older loved ones, what can we expect to pay?
To help you estimate the costs
The government provides an online Residential Care Fee Estimator to help you estimate aged care costs here http://www.myagedcare.gov.au/estimatefees-for-aged-care-services. As for the type of fees, depending on the facility, one or more of the following may apply:
Watch out for “extras”
Although the government capped annual and lifetime means-tested fees, additional charges to cover extras like hairdressing, internet access, excursions, etc, can apply. It’s important to check with the facility first to find out how these extra services are offered and their associated costs. They can sometimes be disproportionate to the services supplied and add up to a substantial amount. Aged care providers must give itemised accounts to the resident breaking down each of these services and the associated charge. Legislation also states that these fees cannot be charged more than one month in advance.
Plan to make it easier
The desire to provide loved ones with the best possible living conditions sometimes forces older people to sell their homes to afford care for an aging partner. Not only can this affect the age pension they receive, but can see the partner not in care seeking accommodation with relatives or alternative housing – a heartbreaking situation for someone wishing to leave an inheritance behind.
The focus on self funded retirement doesn’t always consider increasing life-expectancy and what happens beyond pension-funding projections.
This is where your financial adviser can help. Indicative of our times, strategies for wealth creation with extended pension horizons are increasingly relevant. They help to support appropriate income levels so you are less likely to need a lump sum withdrawal from your investment portfolio.
You’ve heard it before: you’re never too young to plan your future. But you’re never too old either!