Just one in seven older Australians planning for the costs of aged care

Too many older Australians are in denial about having to access, and pay for, their future aged care, new survey reveals

Just one in seven older Australians have prepared financially for their future aged care, new research shows, with many in denial they will ever need care or have to pay for at least some of it.

Almost 50 per cent had either not given the issue any serious thought, believed they didn’t have the money to think about aged care or simply didn’t understand care costs, the study shows.

Based on a survey of 5,000 Australians aged 50 and over, the study by older person’s advocacy group National Seniors and financial management firm Challenger shows it is the more financially secure and highly educated, and those who set personal budgets, who are more likely to be planning a transition into aged care.

National Seniors chief executive officer John McCallum said the number of older Australians actively planning for a comfortable later life were “alarmingly low.”

“It is critical that aged care costs are built into later life financial planning,” Professor McCallum said.

Professor John McCallum, CEO of National Seniors Australia. Picture: Supplied.

“People are hesitating because of the negative media around nursing homes or simply denying the fact that they will need care and will have to pay for at least some of it,” he said.

Those who had been exposed to the aged care system, for example having a relative receiving home care or residential aged care, were more likely to plan financially for their own care, the survey found.

But the study also said most older people continued to believe that all age care should be funded by the government through general revenue.

“This provides an additional perspective on why people do not incorporate age care costs into their financial planning,” it says.

About one in three Australians over 65 use some form of aged care services. The federal government funds about 78 per cent of all aged care, but people are required to contribute to their care in line with their income and wealth.

The complexity of the aged care system means older Australians are often unaware of the fees, charges and co-payments they will be responsible for until they finally reach the stage of needing access to care.

Professor McCallum said most older people must accept that they will one day need aged care, and need to pay more if they want higher quality accommodation and services.

“Having financial resources to access aged care and support services of choice can greatly increase retirees’ quality of life and independence,” he said.

“A financial plan that includes aged care also relieves stress and anxiety, either for family members or the older person themselves.”

Investment management company Challenger head of retirement income research Aaron Minney said too many people are caught off guard by the costs of aged care, because they “find it hard and often confronting to consider the fragility of old age.”

“Making a plan ahead of time can help ensure out of pocket costs are covered and provide confidence that you’ll be well looked after as you age,” Mr Minney said.