Recent reports suggest that each year, our life expectancy as Australians increases by three months. Whilst that it great news for those of us that aspire to a long life, the implications for planning financially for a longer life become increasingly difficult.
Aged care is one of those topics that most of us prefer not to discuss. But from a lifestyle and financial perspective, it can be one of the most important decisions we ever make. For that reason, it is vital that we take the care and time to consider the issues and get appropriate specialist financial planning advice.
Demand for Aged Care in Australia - Financial Planning Perspective
In Australia there are currently around 2.1 million people over the age of 70. By 2020, there will be close to 3 million – and this is before the large generation of baby boomers makes their presence in this age group felt. With this ever-increasing ageing population, comes the difficulty in providing enough aged care beds for them in later life. To purely keep up with demand, an additional 8,500 aged care beds in Australia will need to be constructed each year over the next decade. With more and more demand comes higher and higher cost and the need to prepare early for later life.
Important information about Aged Care in Australia
-To be placed in an aged-care facility, individuals are assessed to determine whether they require low (hostel) or high (nursing home) care.
-The fees and charges applicable are generally based on formulas set by the Australian Government. These differ depending upon the level of care (low or high)
-Centrelink conducts asset and income testing to determine the amount of fees to be paid. This assessment is not compulsory but where a person chooses not to undergo the assessment, they will pay the highest fee level.
-The maximum total of the fees in nursing homes is almost $50,000 per year, depending on an individual’s financial circumstances and needs.
-Accommodation bonds are applicable for some facilities. These are not set by the government and can cost between $100,000 and $600,000 in today’s money. This cost varies depending upon the type and location of the facility and the level of care required.
All of these obviously create a significant strain on individuals and families. Often, families want the very best for their loved ones and place them in homes offering extra services at their own expense.
Plan! You need to start thinking early about your financial plan for the future - both for yourself, your partner, and your loved ones. You should consider preparing for aged care and retirement by seeking the advice. With specialist financial planning advice, it is often possible to reduce the costs of aged care significantly.
*Source: Financial Planner
