It’s hard to know what advice to take when it comes to retirement.
Some say people are spending it too fast, others say too many people are dying leaving a big lump of unspent super behind and as a result denying themselves an enjoyable later life.
However, regardless of how the experts think we should be spending our money, a survey has found many older Australians are simply too scared to spend it due to rising aged care costs.
AMP research reveals that seven in 10 Australians worry about the cost of aged care and, not suprisingly, four out five don’t feel prepared to transition into aged care.
AMP commissioned data group Dynata in February 2024 to survey 2000 Australians aged 50 years and over and under 40 years about their attitudes to retirement, aged care and intergenerational wealth transferral.
Ageing at home
It found the majority of older Australians would prefer to avoid aged care and remain living in the family home, with three in five saying they would prefer to age in the family home and half preferring to receive care in the home. Further, three in four expect aged care to diminish their wealth and children’s inheritance, while almost one in three worry about the burden of aged care cost on their children.
And almost half don’t even know what government assistance is available to them for aged care.
AMP group executive, super and investments, Melinda Howes said the survey showed Aussies had a long way to go to a comfortable and secure retirement.
“These insights bring to light the financial worry and lack of understanding many older Australians have about aged care, including its cost, how they will fund it, and how it interacts with the pension system,” she said.
“The government’s aged care reforms are an important step towards helping support the growing number of older Australians choosing to retain their independence, and the financial services industry also needs to do more.
Aged care worries
“It’s critical we continue to work with government and regulators to help take these aged care financial worries off the table for retirees, and allow them, with their families, to focus on physical and emotional wellbeing during this often challenging phase of life.
“This begins with building financial confidence during the transition into retirement, giving older Australians greater choice and optionality when they reach this critical life stage.
“That means instilling peace of mind that their savings and income will last, and understanding the available options for receiving care.
“This would not only provide comfort in the knowledge that they can remain financially independent as they age, but unlock a better quality of life in the early and active years of retirement.”
Support at home
In the aged care reforms announced this week, starting from 1 July 2025, 1.4 million older people will have access to the Support at Home program by 2035 to help them stay in their homes for longer. Support at Home will deliver support for 300,000 more participants in the next 10 years including shorter average wait times from assessment to receive support and more tailored support.
The bill will also deliver 107,000 homecare packages in the next two years, a record number, the largest homecare package release yet.
What can you do?
AMP recommends six steps to help manage the transition to aged care:
1) Early planning: the sooner you start planning for the possibility of aged care and factor it into long-term retirement outcomes the smoother the transition will be.
2) Speak with your family: discuss the possibility of aged care with your loved ones and likely carers before the need to enter a care facility to help you make an informed decision.
3) Access government resources: the government’s My Aged Care website provides valuable information to help support the transition. ASIC’s MoneySmart is also a great resource to help you organise and plan for retirement.
4) Speak to your superannuation provider: they can offer resources to help with your retirement knowledge, including a free retirement health check or intra-fund advice. Having greater control of your finances can give you the confidence that you can afford the cost of your care.
5) Know what charges to expect: some typical costs of moving into an aged care facility include a daily fee for day-to-day services such as meals and laundry, payments towards your accommodation and an extra fee determined by a means assessment.
6) Increase eligibility for assistance: eligibility for government assistance in paying aged care costs is means tested, so you can reduce your costs by reducing your assessable assets and income through strategies such as using a lifetime income stream.
Have you thought about aged care for you or a loved one? Why not share your experience in the comments section below?
Also read: How transitional aged care helps keep older Aussies out of hospital
