Unprepared Aussie seniors fear next steps in retirement
A significant majority of Australian seniors feel unprepared for the transition to aged care, with many expressing their concerns over the anticipated high costs of care, a new survey has revealed.
Around 80% of Australians aged 65 and over say they are ill-prepared for the shift to aged care, results from AMP’s latest survey reveal, while around seven in 10 expressed concerns over the cost of care.
A significant three out of four surveyed seniors said they expect aged care to diminish their wealth and children’s inheritance, while nearly one in three are concerned about the burden of aged care cost on their children.
Curiously, eight out of 10 respondents to the survey said they were confident their children would make the right decisions on their behalf about aged care, if needed.
Figures from the Australian Government’s myagedcare portal show the basic daily fee for residential aged care services currently runs at $63.57 per day, or around $23,000 each year for singles – equivalent to 85% of the single person rate of the basic age pension. On top of this, residents are often required to pitch in for accommodation costs, which are paid out of pocket depending on their current accumulated assets or income.
The survey found, however, significant resistance to relocating into residential aged care facilities, with 7 in 10 saying they were against such a move.
Costs for a Home Care Package, enabling elder Australians to receive care in their own homes, are also not insignificant, ranging from around $10,500 per year for basic care needs to $61,400 for high care requirements.
Despite the high costs, at least half of those surveyed said they were unaware of the available options for government assistance for aged care; these include subsidies supporting options for both home care and residential care, depending on income and existing assets.
By 2035, around 1.4 million Australians are expected to stay in their homes as they age, the Federal Government projects.
An increasingly long-lived Australian population is projected to increase the over-85 cohort three-fold within the next 35 years – from 515,700 in 2018-19 to more than 1.5 million by 2058.
Recent Government reforms have attempted to address concerns about the difficulties faced by elder Australians in accessing and navigating the aged care system, as well as improved access to at-home support.
Commenting on the results of the survey, AMP group executive, super and investments, Melinda Howes said the 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”.
AMP expressed concerns that retirees currently “lack the financial confidence to spend in retirement and are living more frugally than they need to”. As well, citing the Treasury’s Retirement Income Review, many older Australians were found to be passing away with the bulk of wealth they had at retirement intact.
For Howes, the Government’s Aged Care reforms are an “important step towards helping support the growing number of older Australians choosing to retain their independence”. However, she urged financial services industry to also “do more”.
“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 a 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.”
According to Howes, “more affordable and accessible financial advice is central to building this confidence, and in helping demystify the nuances and complexities of our retirement system, including how the aged care system interacts with the pension and family home.”
“The onus is also on the financial services industry to develop new and innovative retirement solutions which provide greater lifetime income certainty and make it easier to downsize or unlock equity from what is most Australians’ largest financial asset – the family home.”