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Almost 95 percent of Aussie adults are worried about aged care costs — can you afford it?

Planning during retirement could help ensure you can afford aged care if you need it

<p>Aged care homes can be a good option for people needing extra care in retirement, but the costs worry Australians. [Source: Shutterstock]</p>

Aged care homes can be a good option for people needing extra care in retirement, but the costs worry Australians. [Source: Shutterstock]

Key points:

  • Around 95 percent of Australian adults younger than 55 years are ‘concerned or extremely concerned about the cost of aged care,’ according to a 2024 Aware Super fund survey 
  • Fifty percent of Australians are older than 85 years when they first enter residential aged care, according to recent data from the Australian Institute of Health and Welfare
  • Planning for retirement and costs associated with aged care with financial planner assistance could ease stress later on

Almost 95 percent of Australians aged between 18 and 54 are ‘concerned or extremely concerned about the cost of aged care,’ according to a survey conducted by Aware Super fund in early 2024. 

Multiple media outlets have reported that the average Refundable Accommodation Deposit cost may now exceed $500,000 dollars, with the maximum amount being $550,000 without approval from the Independent Health and Aged Care Pricing Authority. To learn more about RAD, visit the Department of Health and Aged Care website. 

Head of Retirement at Aware Super, Jacki Ellis clarified the importance of establishing personalised and tailored information for Australians thinking about retirement.

“We always need to remember that retirement is about how we live our lives in the years after we finish full-time work and is deeply personal,” said Ms Ellis.

Over 100,000 retired Aware Super members were asked about the way they use their super, with research suggesting that there are three stages, namely, ‘go-go,’ ‘slow-go’ and ‘no-go,’ as per a statement made by Ms Ellis.

“Initially, when retirement is new, it’s the ‘go-go’ stage [and is] a time [that] new retirees tick off the adventure bucket, whether that be travelling or exploring, volunteering or learning. Then we see the ‘slow-go’ stage, focused on community and settling into the routine of retirement and finally, the ‘no-go’ stage where age becomes a factor and people may need more assistance to get the best out of life,” she said.

Ms Ellis said that while a new retiree may feel comfortable spending money on holidays when they receive their super, being mindful of later expenses towards the end of retirement can come up unexpectedly, such as needing to live in an aged care home. 

“[…] These costs often hit at a point in time when a large portion of a retiree’s super may have already been depleted — so, planning for this possibility is even more important,” she said. 

With over 50 percent of Australians being older than 85 years when they first become an aged care home resident, there’s no surprise that making decisions quickly is important to ensure one’s quality of life. The average life expectancy for Australians is currently around 83 years, meaning that when many Australians consider essential aged care, they may not have much time to make such decisions.

However, while thinking about sufficient funding in the future might seem overwhelming, knowing how to estimate your savings could help ease related stress. Ms Ellis emphasised the value of a new retirement calculator available on the Aware Super website.

“Over the last nine months, we’ve seen more than 57,000 of our members accessing our purpose-built My Retirement Planner, resulting in more than 37,000 Statement of Advice

being issued,” said Ms Ellis. 

This calculator tool has functions that allow you to enter your specific financial information and goals to tailor your retirement savings and ensure you have enough to enjoy life and afford aged care if required. You can access the calculator online for free.

Additionally, if you are thinking about retirement or looking into aged care options now, you can visit Services Australia to identify your aged care costs depending on your income and assets. 

While the Refundable Accommodation Deposit can be a significant cost to consider, other costs are also associated with residing in an aged care home. To learn more about these, head to this Aged Care Guide: What costs are involved in nursing homes?

Getting assistance from a financial planner that specialises in aged care may also make it easier to navigate the expenses and ensure you get the most for your money. 

Finding the right financial planner who understands your specific situation can help you navigate aged care home options. 

When moving into aged care, multiple aspects must be considered regarding your financial situation to ensure that you can afford appropriate care and avoid making any financial mistakes regarding your current assets. 

Learning what a financial advisor does may help you understand how they can help you manage your finances when moving into an aged care home. Finding an organisation that specialises in financial planning related to aged care doesn’t have to be difficult and it’s helpful when you can make decisions efficiently.

To read more about getting a financial advisor and expert advice, head to this article: Experts stress that financial help means independence for life.

 

Will you have enough money to afford aged care when you need it? How are managing your finances during retirement?

Let the team at Talking Aged Care know and subscribe to the newsletter for weekly news, information and industry updates.

Relevant content:

What older Aussies want from the 2024–’25 Federal Budget

How does a resident’s life shape their attitudes to aged care?

Could your neighbourhood increase the risk of dementia?

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