Nation to struggle with aged-care costs

09-Mar-2015

By Julie May

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One in five Australians would struggle to meet aged-care costs in retirement amid a backdrop in which those costs would continue to rise, according to an MLC and Investment Trends research report.

The “2014 Retirement Income Report”, based on a national survey of 6350 Australians over the age of 40, showed nearly one in two Australians had not considered making arrangements to meet aged-care costs in retirement.

Investment Trends senior analyst Recep Peker said increasing pressure was being placed on the government to fund those costs, and while aged care might not be an easy thing to talk about, the ability to cover such costs would save families time and stress in the future.

“We know that many Australians are looking to the government to fund their aged-care costs, but with increasing pressure on the pension system, it’s more important than ever for people to look at other sources of income to reduce their reliance on the pension and give them more certainty,” Peker said.

Only 21 per cent of Australians said they had made arrangements for anticipated aged-care costs, indicating they had enough money and/or assets to cover expenditure, while alarmingly 46 per cent said they had not thought about aged care at all.

Peker said other survey participants had thought about aged care, but had made no arrangements.

Of those, 17 per cent said they would need some government help, 8 per cent said they did not think they would require aged care, while 5 per cent said they expected the government to fund all their aged care costs, and less than 5 per cent indicated they would turn to their families.

MLC retirement solutions general manager Andrew Barnett said Australia faced a very complex regulatory environment for aged care.

“Aged-care expenses can be very large, particularly when you’re looking at accommodation bonds,” Barnett said.

“Some of the options can be complicated to navigate and it’s relatively unpredictable because some people won’t need aged care, but everyone to some extent will worry about it.

“The earlier you start thinking about this thing, the longer the planning horizon is that you have, the more levers you have at your control, and the bigger adjustments you are then able to make.”

Peker added the fact 50 per cent of Australians had not considered plans for aged care represented a huge gap, but also a huge opportunity to service the market.

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