Did you know?
- Approximately 45% of people over age 70 will use aged care services
- Accommodation bonds in capital cities are now in excess of $350,000
- Planning before you need aged care can improve your financial situation.
All too often we procrastinate over financial decisions and panic when the event occurs. Unfortunately this procrastination can limit the financial planning opportunities.
This is an all too common scenario for aged care. A move into aged care usually happens in a hurry and with emotional turmoil but planning ahead can help to improve your situation and help to avoid family conflict.
You might be thinking about your own future needs, or you may be faced with making decisions for a parent or other elderly relative. Advice is a key element of these decisions. Aged care is a growing issue for many Australians and financial advice is important.
The costs for aged care are increasing and with an ageing population we all need to think more carefully about how we will be affected and how to access the help we need. Currently, more than two million people in Australia are aged 70 and over and approximately 45% of these will use aged care services. The cost for Government is estimated to double by 2049/50 as a percentage of our economy (as measured by our Gross Domestic Product – GDP).
This will be more money than the Government’s budget for defence or education. The increasing cost of aged care is shown in Chart 1. How you plan for aged care and the decisions made can have a significant impact on your lifestyle and comfort, your entitlement to the age pension and the fees paid to access aged care facilities.
Planning for aged care should commence early and continue throughout your retirement. The fees to enter an aged care facility tend to be significant and require careful planning ahead of time.
Thinking ahead can give you or older Australian relatives lifestyle choices including:
- The chance to live in your own home to maintain your independence
- Strategies to reduce ongoing fees
- Options for funding the entry costs
- Strategies to invest other assets, and
- An understanding of the impact of decisions on age pension entitlements.
If planning your retirement or helping a family member deal with the challenges as they age, a financial planner can help you to navigate through the fees for aged care and the strategies to meet your family and estate planning circumstances.
Source: Strategy Steps, November 2010 (please note that quoted figures may now be out of date)