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This trend is predicted to continue as the baby boomer generation ages. In fact, by 2064, the AIHW predicts there will be 9.6 million people in Australia over the age of 65. Part of the reason for this is that Australia has one of the highest life expectancies in the world, thanks to healthy lifestyles and medical advancements.
As demand for residential aged care continues to grow, aged care fees are likely to continue to rise. Fortunately, there are things you can do now to prepare for growing residential aged care fees in the future. Let’s look at five of them.
1. Calculate Your Costs
One of the most important things you can do to prepare for your future aged care costs is to calculate a ballpark figure of how much you’ll need. Of course, you don’t know how long you’ll live and what kinds of health issues you’ll face, but you have enough information to make a good estimate.
The My Aged Care website offers several fee calculators that help you to know how much you would have to pay today for the following residential aged care fees:
- Basic daily fees
- Accommodation payments
- Income-tested fees
- Means-tested fees
Using this information, you can calculate a rough figure for your future residential aged care costs, but your wealth management adviser will assist you in making accurate cost predictions.
2. Review Your Retirement Plan
Provisions for aged care are an important part of effective retirement planning. If you want to live in a residential aged care facility in your later years, you’ll want to include this information in your legal documents and make plans for how to pay for it. For instance, you may want to sell your family home to help cover some of the costs of aged care, or you may need some extra funds beyond your superannuation. Reviewing your retirement planning strategies, and making adjustments if necessary, will help you to be prepared.
3. Salary Sacrifice
If you find that you’re not currently saving enough money to pay for your retirement and for residential aged care fees, talk to your employer or your financial adviser about increasing the amount you contribute to superannuation each month. The tax benefits of investing in superannuation might help you to achieve your retirement planning goals more quickly than other investments will.
4. Visit Local Aged Care Options
Not all aged care options cost the same, and if you’re trying to financially prepare for aged care fees, it’s helpful to know about your different options.
As you visit different facilities, find out what kinds of services are included in daily care fees and which services you’ll need to pay extra for. This information will help you to know if you’re willing to spend less on your aged care or if you need to save more now. Ask plenty of questions, and consult with your adviser about your findings.
5. Incorporate Your Aged Care Plans Into Your Estate Planning
Your aged care plans will affect estate planning decisions such as whether you’ll sell, retain or rent any property you own when you move into a residential aged care facility. Depending on your cash flow situation, you may want to consider renting out your family home to help pay for increasing aged care fees. While you’re evaluating your plans, make sure you review your will and enduring power of attorney.
For more information about ways you can prepare for growing residential aged care fees, or to talk about any other financial planning issue, reach out to us at Altus Financial. We’re here to help. And for a comprehensive look into aged care costs, download our eGuide below.
