Most people can’t afford not to think about getting old. If you don’t think about it early on it may limit your options when the time comes. You may not end up getting the care you want or require or you may have unrealistic expectations. So many people are adamant that they’re not going into ‘one of those homes’. But if you don’t give consideration to the support structures you need, and the costs involved, you might end up being somewhere you really don’t want to be.
You may need more aged care services than you realise
Most people have an image of what aged care looks like. It involves people who have advanced illnesses and are well into their eighties or nineties spending their final years at a nursing home. But this is not usually how it unfolds. Like many, your health may slowly decline and by the time you need residential aged care you’re at a crisis point. To avoid this happening to you, you need to prepare for this likelihood and its aftermath in advance.
Aged care needs to be considered a long time before the actual point of needing to go into full-time care arises. I’d encourage you to think of it more broadly as part of your retirement plan because you may need some aged care services sooner than you think. So even if you’re just 65 and 20 years away from needing residential care, you may require other aged care services like home help in just a few years’ time.
Moving into aged care is the final point of being unable to manage on your own – but up until that point there are several other options.
The main driver for this process is going to be what sort of health you’re in. You might have retired, then decided to move to an independent living unit with a bit more community support. Then you might need to progress to in-home care –someone to help in the house. From there it might be help with washing or cooking or showering, without the need for full-time care. Then there’s the final transition to full-time care where the traditional nursing home comes into play. It’s important to consider these aspects of getting older as part of your broader retirement plan.
Planning for aged care goes beyond finances
When you’re thinking about aged care, estate planning is also an important consideration. It’s crucial that you know who will be managing things at a time of crisis. Is there a Medical Power of Attorney in play? Have you given consideration to an Advanced Care Directive? Do you want to be resuscitated if something were to happen? If you’re in Victoria, what do you think about the new laws around assisted dying?
All these things come into play. It’s a highly emotional time, when you may be battling with reduced health and a compromised capacity for decision-making. This is why it’s important to start planning for ageing, and why it’s better to do it sooner than later.
Planning and having conversations with all the relevant people – including your family – will allow you to have a lot more control during an uncertain time of life. During a crisis – and this is what usually triggers a move to aged care – decisions are rushed, people make mistakes and things can go horribly wrong.
Funding aged care is a balance between government and private funding
How you finance your aged care, and in particular, your cash flow is also important because aged care can be costly.
There are several means-tested government options over the course of your transition to aged care that you could take advantage of. For example, for home care there are four packages, level one being the lowest level of care, and level four being the highest. Government funding is available to use towards many of these aged care costs and you can also fund part of it. Ideally you will have a set budget, and you can approach a provider and select the services that suit your budget, like having a private carer, for example. You want to be able to have choices, so it’s important to structure your finances so that you’re able to access government-funded benefits as this will increase your care options and potentially save you money.
This and other aged care costs should be considered as part of your broader retirement planning, so speak to professionals and seek advice. This could be having a chat to your financial planner just to get an overview of what the current aged care settings are.
An advisor can also run some financial modelling and analysis to work out what your financial position will look like when you’re at retirement age whether you’re a self-funded retiree or not. They can then advise you on what strategies you can put in place to maximise your cash flow and make sure your overall financial position is maintained and not eroded too much by the significant costs of care.
While it may seem difficult to think about aged care, it’s much better that you put in place a plan for it now then wait and hope for the best when you’re at your worst.
Martin Sherwood is an Executive Advisor at Viridian Advisory
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