In Australia we have a massive ageing population. Currently 15% of Australians are aged 65 or over. This number will increase to 20% by 2037. As our population ages our economy is placed under increasing pressure, as more and more Australians enter the aged care system.
Currently many retirees fund their retirement care, employing their own carers, paying for equipment and any other health care they require.
This group are currently encouraged to do so with tax offsets which recognise that by funding their own care, these retirees can stay out of costlier nursing home system, thus reducing the burden on the Australian economy.
However, as of July 2019 these tax offsets are ending. The government is seeing aged care costs skyrocket, in addition to the storm of Australians approaching retirement age which will only serve to place even more burden on the economy.
Aged Care Facilities
In Australia, dementia is recognised as the greatest cause of disability in older populations. There are over 400,000 Australians suffering from dementia. More than half of the residents in residential aged care facilities are afflicted with the disease. Older people’s healthcare needs vary greatly, depending on their cognitive impairment. Still, they have higher care needs than those who don’t suffer from the ailment.
Some Australians are fortunate enough to be able to employ a private aged care support team. They could, for instance, hire three carers; each of which will take eight-hour shifts for seven days a week. Such a setup is quite expensive, ranging from four to five thousand dollars a month. That excludes other expenses such as food, utility and home maintenance. Some individuals have sufficient investments in assets, which enable them to generate enough income to pay for their healthcare needs. They’re rewarded in tax offsets to do that.
In July, these tax offsets are coming to an end. That includes carers, assisted care, equipment and so on. According to Deborah Rognlien of the IF Group, this enables the federal government to afford aged care costs. Taking away tax offsets from people who can self-fund their aged care might seem ridiculous but the government is doing it, along with several other efforts, to reduce aged care costs.
Change is also coming to the public offering space. The healthcare needs of aging populations are varied. For that reason, we also need more care options to be available for different families. They can, for instance, choose between a 99-year lease facility, a strata title or a not-for-profit organisation. These might be independent living facilities but they will be affected by the upcoming changes to the aged care system as well.
Rognlien advises families to be aware of these changes as they may not always be for the better. Hence, they should turn to financial or legal advisors who can help them navigate their way around these new adjustments.
Australians can look into their retirement options about five years before they intend to settle down. Together with their family members, they can choose the right care facility that meets their needs and fits their financial situation. They should prepare important legal documents like their will while their mental capacity is strong. Not to mention, they should set up their medical power of attorney – which is now known as a medical treatment decision- maker.
Aged care is just another part of what can be a complex plan and journey forming retirement planning, wealth creation and even estate planning. Through the Dollars With Sense network we have access to specialists and panel members who can assist you in these areas and more. For more information what options are available to you, request a free consultation with one of our team members below.