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Aged care can be a very complex area of financial advice. It’s also a confronting topic for many people but it’s critical to consider it as you head towards retirement.
Your financial adviser can guide you on how to prepare financially.
Plan early
Not all of us will need to access formal aged care facilities but if we do, we want to know we can access the best we can afford – and that is through early and thorough planning.
Planning should start the minute you put in place your retirement plan, says Aged Care Steps director Louise Biti CFP(r).
“It’s part of deciding what’s important to you during your retirement,” says Biti.
You need to make sure you are financially prepared for the best care for yourself should you need it.
Things to consider
Typically, aged care needs will take up about 15-20% of your retirement period.
One consideration is whether you will need access to capital and income in the last years of retirement.
“You need to make sure you’re keeping access to cash flow and keeping capital reserves to meet your future support needs,” Biti says.
If you’re looking to make a geographic move, consider whether this would be a home and location for your lifestyle today, or whether it takes into account how you want to live in later years. Include your likely medical needs – access to good hospitals, for example.
If it’s your forever place, it is suitable for your future needs. If it isn’t you’ll need an exit strategy and should factor in costs and issues of moving.
Also think about your support network.
- Who is going to support you socially, emotionally, physically?
- Have you had the conversations about your future with these people?
- Do you have the appropriate legal papers? This includes Power of Attorney, Power of Guardianship, medical directives and a Will. Think about how they work individually but also how they work together. For example, if you have Power of Guardianship with a different person to your Power of Attorney, there may be issues when the Power of Guardianship holder needs to access money which the Power of Attorney holder manages.
Keep it up-to-date
Review your aged care plans every time you review your overall financial plans, and at least annually. Biti suggests diarising this process because time gets away, and if you don’t have a set date to ponder your circumstances, you might find yourself in three years, in vastly different situation, whether that’s health or financial.
Reviewing doesn’t necessarily mean changes need to be made, but it’s an opportunity to consider what to do if your circumstances have changed or if new opportunities have presented themselves.
Don’t give away what you may need
One of the potential traps for pre-retirees is giving assets away.
For example, parents may think that having savings and some assets means they can give money away to their kids. While this is noble and can make financial sense when entering the housing market can be so difficult for young people, this may not be the best strategy for the parents in the long term.
It can be hard to anticipate future change – while in early retirement you know how much you are spending and you feel you have surplus, but life (and costs) in later retirement look very different.
Needing help in later years
Currently, as soon as you, or the older person you care about, needs support, there are two choices: either engage private assistance – nursing, cleaning etc, or seek government subsidies through the government program, My Aged Care.
This can be a challenging path to navigate so you might need the help of someone you trust.
To access subsidised services, register with My Aged Care. You will be assessed for your eligibility for services – ranging from simple home support such as cleaning or even social support to residential care. The intention is to keep people at home for as long as it’s feasible.
Current wait times range from a few weeks to 12+ months for appropriate packages to be available.
https://www.myagedcare.gov.au/
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