How Safe Is Your Retirement? Funding Your Aged Care

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Thinking about your retirement and specifically aged care isn’t necessarily easy. But it is an unavoidable reality that most of us have to prepare for. This whole process is made all the more simple for both your future self and loved ones if you make plans well in advance. So, to help you make the best first steps, we’ve collated all the info you need to know along with our expert tips on how to get your finances in order to fund your retirement.

What you need to know about aged care before it’s too late

Thinking about your retirement and specifically aged care isn’t necessarily easy. But it is an unavoidable reality that most of us have to prepare for. This whole process is made all the more simple for both your future self and loved ones if you make plans well in advance. So, to help you make the best first steps, we’ve collated all the info you need to know along with our expert tips on how to get your finances in order to fund your retirement.More often than not, we don’t consider our own retirement until we’re too close to it and it’s too late. For many people their retirements are some of the most carefree of their lives – so why make it stressful by not planning ahead? Let’s start out with some aspects to consider as these will dictate the savings or finances you’ll need to fund your time in aged care.

  1. Range of care options 

Many care homes are now state-of-the-art facilities that offer a very high standard of living. There is also a range of levels of intensity of care – from wardened apartments (which are for the more able) to care homes with onsite healthcare practitioners and round the clock care. In addition, there are care homes in different parts of the country. Much like homes, different locations come with different lifestyles: for example, a home on the Sunshine Coast will offer a more outdoorsy lifestyle, while those near the bustle of Sydney will give you a more cosmopolitan lifestyle. Of course, the standard of home, level of care and location of the aged care facility will massively affect the fees, so consider your needs in terms of your current health and the standard of living you’re looking for. 

  1. Estimating when it’s time to retire 

You most likely have an optimal time that you’d like to retire. This will all depend on your financial situation, living situation and whether you’re working for someone else or yourself. Ideally, you want to retire long before you may need aged care, however, you have to prepare for the potential of ill health before then. Having a goal in mind will help you look forward to this time where you don’t need to work and potentially moving into aged care without any financial concerns.  

  1. The care process 

It isn’t as simple as choosing a home and moving in right away. The process does take some time and foresight too. 

Step 1: Approval. At this stage, your health is assessed by a doctor, nurse or social worker who is part of an Aged Care Assessment Team. This will determine your eligibility for care. 

Step 2: Find a home. After moving through the process detailed in point 1, you’ll choose your home. You can apply for as many as you like, so there is no pressure to pick just one if quite a few of them suit your needs. 

Step 3: Sort out your finances. We’ll go into this in more depth below, but essentially, some or all of your costs for accommodation may be covered by the Government. This will depend on the facility, location, and level of care.

Your financial safety net 

The key to all of this is having the finances in place to secure your spot in the aged care you prefer. When there are so many variables and unknowns (who knows what care you might need), it is always best to start saving early and (although this may sound pessimistic) prepare for any unforeseen circumstances. This will ensure that no matter what happens, you’ll have the funds and plans in place to support your situation. 

So when considering how much you’ll need, what will you need to take into account? 

  • Upfront aged care costs: the one-off costs associated with moving into a facility  
  • Ongoing care costs: the average cost of the accommodation and basic daily fees 
  • Your current assets (including your former home): do you want to keep them or will you not be returning? They can be used to help fund your aged care. 
  • Centrelink/DVA benefits: look into how benefits you currently receive that can be applied to your aged care funding or any additional benefits you may be eligible for. 
  • The assets you want to leave in your estate: Although difficult, think about what you might want to leave behind. 
  • Tax offsets: explore the tax offsets you may be eligible for as this may free up some additional assets or funds to put into your aged care. 

Now, this may all seem complicated but the crux of it is assessing your current financials, benefits, tax and assets, weighing it up with estimated fees. This may seem daunting, but when calculated can give you a rough ballpark figure to aim for. Divided over the remaining years before retiring, you have a savings goal that you can adapt to your financial situation and current savings. 

We hope this article has given you some clarity over what you need to consider when looking into funding your aged care and some tips on how to get your finances in order. If this all seems a bit much to go alone, why not get in touch with one of our finance experts at Positive Dynamics? We’ve helped tonnes of Australians make the leap into planning for aged care and set them up for a stress-free life. Get in touch today.

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Dane Jansen
Dane is a Managing Partner/Responsible Manager at Positive Dynamics. He embraces his leadership skills to provide guidance to his clients giving them the confidence and conviction to achieve financial success.
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