Opinion
Most of us are anxious about aged care. Here’s how to change that
Rachel Lane
Money contributorA recent survey by AMP asked Australians aged 65 and over their thoughts about aged care. Not surprisingly, most feel unprepared and had widespread financial concerns.
The majority of older Australians are keen to avoid residential aged care, with seven in 10 against moving in to an aged care home. More than half of those surveyed indicated they would prefer to receive aged care at home if it was necessary. However, the costs associated with either option remain a significant source of anxiety.
Financial planning for aged care can be complex.Credit: Getty Images
The cost of aged care is not only a personal worry but also a generational one, as three-quarters of respondents expect that paying for aged care will diminish their wealth and affect their children’s inheritance. One in three respondents are worried that their aged care costs could place undue financial pressure on their family.
One of the key findings of the research is the lack of understanding surrounding government support. Half of the survey respondents were unclear about what assistance is available, leaving many ill-equipped to make informed decisions about their care options.
The complexity of the aged care system and the radical changes coming next year undoubtedly exacerbate these concerns and fuel uncertainty.
AMP’s findings reflect broader trends of financial insecurity among retirees. Many are hesitant to spend their retirement savings, fearing future expenses such as aged care. Treasury’s Retirement Income Review previously found that many older Australians pass away with the majority of their wealth intact, as their financial anxiety caused them to live more frugally than necessary.
Three-quarters of survery respondents expect paying for aged care will diminish their wealth.
The research says that retirees need to take proactive steps in planning for aged care. The conclusion is that with proper financial advice, Australians can navigate the complex system, secure the care they need and reduce the emotional and financial strain on their families.
If we want people to plan for aged care and get great advice about how best to fund it, we need to educate retirees and their advisers. People don’t plan for aged care because they think it is a slippery slope to a nursing home.
We must start our aged care conversations with, “Where would you like to live?” Many people will choose to receive aged care in their home, be it the family home, an apartment, granny flat, retirement village or land lease community.
Reframing our conversations will require financial advisers to expand their knowledge beyond the bounds of aged care homes to a wide range of legal and financial arrangements, which are far more complex.
Australia has an ageing population, and over the next two decades the number of people over 70 will grow by 2.3 million. Over that time demand for home care will double to around 2 million, while the number of people in an aged care home will increase from about 188,000 to almost 350,000.
Creating well-informed aged care decisions for millions of Australians requires us to redefine aged care and what it means for financial advisers to provide great advice on aged care.
Rachel Lane is the author of the bestselling book Aged Care. Who Cares? and Downsizing Made Simple with fellow finance expert Noel Whittaker. The new edition of Downsizing Made Simple is now available online.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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