Australia’s population is ageing. In 2007, 13 per cent of Aussies were aged 65 and over and by 2056 this figure will be close to 23 per cent – nearly a quarter of the larger populace1.
Add to this the reality that many of us are going to outlive our savings, and the age we qualify for the Government pension is rising, then it’s no surprise that aged care and estate planning are hot topics for government, financial advisers, and families alike.
So what are the important things to consider when looking to plan your life, or that of a loved one, after retirement?
Five core issues
1. The costs.
Establish entry fees and bonds and ongoing costs of nursing homes and hostels. For residential care make sure you understand the costs are for things like daily care fees, and income-tested fees.
2. The family home.
Consider if someone will continue to live there, or should it be sold or rented out? You might consider options such as a reverse mortgage.
3. Social security.
Find out how to maximise your age pension entitlement by structuring your assets in the most effective way.
Look at what special tax offsets may be available when living in residential aged care.
5. Estate planning.
Have you or your loved ones sorted out a power of attorney or enduring guardianship?
In July 2014, the Australian Government launched the Let’s talk about changes to aged care campaign (myagedcare.com.au). The changes included:
· greater support to stay independent and in your own home and community with more home care packages to meet your needs
· older people being asked to contribute to the costs of care, if they could afford to do so
· increased flexibility in ways to pay for accommodation in an aged care home
· Centrelink providing home care, and both income and asset testing for people receiving residential care.
A huge part of aged care planning is estate planning. At its most basic, estate planning is about working through what you want to do with your assets when you die. It’s much more than just a Will. Effective estate planning is about protecting your assets and empowering you with the information and knowledge you need to make informed, conscious choices so that your family is not left stranded or your assets eroded or exposed to systems, processes and challenges that you may not be aware of or have even considered.
Whatever your preferred choices are for aged care there is a need for preparation and sound financial planning.
Speak to your financial planner to prepare your financial position ahead of retirement.
Source: BT Financial, October 2014
Reflections on age discrimination: The price we pay for growing older. Speech by Elizabeth Broderick